Budget Day News

Telegraph.co.uk

Following suggestions by the Low Pay Commission,  the National Minimum Wage (NMW) is to rise by 20p an hour to £6.70. This will come into effect in October. 

Also the Tax Band where we have to start paying tax for many of us increases to £10,600 today. Each of us has a 'personal allowance', which denotes the amount we can earn without paying any income tax. If you earn more than your personal allowance, then you pay tax at the applicable rate on all earnings above the personal allowance, but the allowance remains untaxed. Your specific personal allowance depends on your age and, in some cases, your salary.

Many on low paid don't even earn enough to pay tax so an increase in the personal allowance is not likely to do them any good. 

As well as its recommendation for the adult rate, the Low Pay Commission has also recommended: an increase of 3.3 per cent to £5.30 in the Youth Development Rate, which applies to 18-20 year olds; an increase of 2.2 per cent to £3.87 in the 16-17 Year Old Rate; an increase of 2.6 per cent to £2.80 in the Apprentice Rate, which applies to all apprentices in year one of an apprenticeship, and 16-18 year old apprentices in any year of an apprenticeship; an increase of 27 pence in the accommodation offset to £5.35. The offset is the one benefit-in-kind that can count towards the minimum wage. This is the maximum daily sum employers who provide accommodation can deduct towards those costs.

In April 2014 there were 1.4 million minimum wage jobs in the UK. 5.3 per cent of the UK labour force was paid within 5p of the minimum wage. This included: 1.2 million NMW jobs held by those aged 21 and over; 139,000 NMW jobs held by 18-20 years olds; and 40,000 NMW jobs held by 16-17 year olds.

One factor influencing this year’s recommendation has been strong employment growth. Total employment has continued to grow in the economy as a whole and in the low-paying sectors with the year to September 2014 showing the highest annual (September-September) increases in employment and jobs since the introduction of the NMW, as well as strong growth in hours and vacancy levels. Indeed, although the bite has risen sharply in the low-paying sectors since 2007, the number of employee jobs in this part of the economy has grown more rapidly than those elsewhere – 4.3 per cent over the last year compared with 3.1 per cent for other sectors. Employment growth has generally been strong across all firm sizes. Furthermore, the employment performance of most groups of workers particularly affected by the minimum wage – women, older workers, disabled workers, ethnic minorities, and migrants – has been better since 2008 than that of others not so affected by the NMW.