Published On: Fri, Jan 10th, 2020

Minimum Wage and National Living Wage changes for April 2020 explained | Personal Finance | Finance

The National Living Wage for over 25-year-olds is set to increase by 6.2 percent to £8.72 per hour in April this year, the government announced last month. The new rate will begin on April 1, 2020.

This calculation of increase in annual earnings compares the gross annual earnings of a person working 35 hours per week on the new NLW rate from April 2020 versus the 2018/19 NLW rate of £8.21.

Commenting on the increase, Prime Minister Boris Johnson said: “Hard work should always pay, but for too long, people haven’t seen the pay rises they deserve.

“Our government will put a stop to that, giving nearly three million people from Edinburgh to Eastbourne a well-earned pay rise, including the biggest ever cash boost to the National Living Wage.”

2020 National Living Wage rate increases

The National Living Wage (for over 25 year olds) will increase 6.2 percent from £8.21 to £8.72.


2020 National Minimum Wage rates increases

The National Minimum Wage will rise across all age groups, including:

A 6.5 percent increase from £7.70 to £8.20 for 21-24 year olds

A 4.9 percent increase from £6.15 to £6.45 for 18-20 year olds

A 4.6 percent increase from £4.35 to £4.55 for Under 18s

A 6.4 percent increase from £3.90 to £4.15 for Apprentices

In addition to these rises, rates are set to increase elsewhere too.

This includes the state pension, which will rise by 3.9 percent under the triple lock in April 2020.

The state pension increases every year by whichever is the highest out of the average percentage growth in wages in Great Britain, the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI), and 2.5 percent.

The government has confirmed the working-age benefits freeze will end in April this year as intended, after it was first announced in 2015.

Under the freeze, Universal Credit and legacy benefits have remained at the same level since April 2015.

From April 2020, working-age benefits will rise by 1.7 percent, in line with inflation.

Around 2.5million people on Universal Credit will see their payments rise, as will claimants of legacy benefits, the DWP has said.

The legacy benefits affected by the announcement are: Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Housing Benefit, Universal Credit, Child Tax Credits, Working Tax Credits and Child Benefit.

Disability benefits and carers allowance, which have not been subject to the freeze, will also increase by 1.7 percent next year.

Last year, an analysis by the Resolution Foundation suggested that the benefit freeze had reduced the real-terms value of working-age benefits by 6 per cent since 2015.

The foundation also said it left the average couple with children in the bottom half of the income distribution £580 a year worse off.

Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said at the time that “while the benefit freeze is over, its impact is here to stay with a lower income couple with kids £580 a year worse off as a result”.

He also said: “And because benefits will only keep pace with rising prices, the social security safety net will continue to erode – falling further behind earnings and the state pension.”

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