HR · 22 November 2017

Autumn Budget 2017: National Living Wage to rise in 2018

The projected target for the National Living Wage is £8.75 an hour by 2020
The projected target for the National Living Wage is £8.75 an hour by 2020

The UK’s National Living Wage will rise to £7.83 in 2018, the chancellor has confirmed, representing a pay increase of 4.4 per cent for low earners.

Currently at £7.50, the National Living Wage is the hourly rate paid to workers aged over 25 years old. The chancellor, Philip Hammond, used his Autumn Budget speech to schedule an increase in April 2018, claiming employees on basic pay would be £600 better off per year.

The announcement followed recommendations from the Low Pay Commission, which also included increases for younger age brackets.

The Low Pay Commission’s full recommendations

  • The National Living Wage (for workers aged 25 and over) should increase from £7.50 to £7.83
  • The rate for 21-24 year olds should increase from £7.05 to £7.38
  • The rate for 18-20 year olds should increase from £5.60 to £5.90
  • The rate for 16-17 year olds should increase from £4.05 to £4.20

Read more of our Autumn Budget 2017 coverage, here

The policy hasn’t always been popular with Britain’s small business owners. This year, a Federation of Small Businesses (FSB) study found that the majority of small firms were reducing their margins to meet their obligations, while one in four had cancelled their investment plans.

Alongside the increase to the National Living Wage, the National Minimum Wage is also set to rise next year.

Commenting on the incoming pay rises, Alan Price, director of employment law at Peninsula, said: “This early confirmation ensures employers have sufficient time to plan for the wage increases, both financially and administratively.

“Following an increased focus on enforcement in this area, failing to pass on these increases puts employers at risk of being publicly named and shamed or facing financial penalties. Even a one day delay will create liability.”

Inside story: The National Living Wage impact on small business

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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