Of the measures announced at the Spending Review, 49% confirm that increases to National Minimum Wage rates will impact their payroll department most substantially

15 December 2020

Following on from the Spending Review, which was delivered by Rishi Sunak on 25 November 2020, the CIPP’s Policy team wanted to gauge which of the measures announced would have the most significant impact on payroll departments.

In order to do this, the team posted a Quick Poll on the CIPP’s News Online page, which asked:

“Which of the measures announced at Spending Review will impact your payroll department most?”

The most popular response was that the increase to the National Living Wage (NLW) and National Minimum Wage (NMW) rates would impact payroll departments most substantially, with 49% of respondents confirming that this was the case. The new rates will be implemented from 1 April 2021, and are as follows:

National Living Wage

£8.91

21-22 Year Old Rate

£8.36

18-20 Year Old Rate

£6.56

16-17 Year Old Rate

£4.62

Apprentice Rate

£4.30

Accommodation Offset

£8.36

This was followed by the increase to the income tax threshold from 6 April 2021, as the figure is due to rise by 0.5%, in line with the September Consumer Prices Index (CPI) measure of inflation. 23% of those who answered selected this option. The news that the National Insurance (NI) limits and thresholds are set to increase will have the biggest impact on payroll departments for 18% of respondents.

Only 10% of answers to the Quick Poll indicated that the news about public sector pay would have the biggest effect on payroll departments. This could potentially be because this only has a direct impact on public sector organisations. The Chancellor confirmed that a pay rise would be awarded to over one million NHS workers. Additionally, the lowest paid individuals, who earn less than the median wage of £240,000 will receive a pay rise of a minimum of £250. More broadly, however, the rest of the public sector will see a freeze on pay rises in tax year 2021-22.

 


Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information. Download the CIPP's Payroll: Need to know - your guide to payroll legislation and reporting for the most up to date data.