The National Living Wage (NLW) will be increased to £7.50 in April 2017. The increase was announced by Phillip Hammond, the chancellor in his first Autumn Statement.
The increase was recommended by the Low Pay Commission (LPC). The increase represents a 4.2% rise on the current NLW wage. The NLW was introduced as the minimum wage for all workers aged 25 or above.
In addition to the increase in the NLW, the government has also accepted the LPC recommendations pertaining to the National Minimum Wage in their entirety. The rates for the National Minimum Wage will also be increased in April 2017.
Those aged 21 to 24 will see an increase from £6.95 to £7.05, 18 to 20 year olds will see their rate rise from £5.55 to £5.60, whilst 16 to 17 year olds will have their hourly rate raised from £4.00 to £4.05. Apprentices will also see their rate increased from £3.40 to £3.50.
The government is also implementing the Office of Tax Simplification (OTS) recommendation that the thresholds for the National Insurance primary (employee) and National Insurance secondary (employer) should be aligned from April 2017. This means that for both employers and employees they will only start to pay National Insurance contributions when their weekly earnings exceed £157.
The Autumn Statement also indicated that the employer National Insurance and income tax advantages of salary sacrifice schemes will not be available after April 2017.