When will the minimum wage rise to £12.20 and who can claim?

Rachel Reeves will reportedly use this week’s Budget to deliver an above-inflation increase minimum wage.

Ministers are also said to be considering ending the minimum wage gap for under-21s and over-years, and potentially increasing the wages of younger workers.

But there are concerns when this increase is combined with other tax changes. Can put undue pressure on businesses already struggling with costs.

How much will the living wage increase?

Multiple sources have reported that the national living wage could rise by more than 6 percent in Wednesday’s budget.

The current rate for over 21s is £11.44 per hour, but accordingly Times, this is expected to rise to around £12.20. The exact figure will be confirmed in the Budget.

This could mean that a full-time worker on minimum wage could see their pre-tax earnings increase by almost £1,600.

This new rate will be effective from the beginning of the next financial year, meaning it will come into force on April 1, 2025.

The Low Pay Commission, which advises the government on the national living wage, said it expected the level to rise to £12.10 in September but said stronger earnings growth had triggered a larger rise.

Ministers are said to have told the board they want to go beyond the current target of ensuring basic pay does not fall below two-thirds of average earnings.

Who will receive the new living wage?

Currently, the national living wage is only available to those aged 21 and over; A separate national minimum wage applies to apprentices or those under this age.

The national living wage is £11.44, while 18 to 20-year-olds receive £8.60 and apprentices and under-18s receive £6.40.

But the Government is reportedly planning to introduce a new “adult wage” in the future, which would end the gap between young workers and their older counterparts.

This is not expected to be announced in the Budget on Wednesday, but it is understood Reeves plans to increase the minimum wage for under-21s by more than 6 per cent to close the gap between the two rates.

Some employers also pay the real living wage, set by the Living Wage Foundation, which claims to take into account “real living costs.”

Although payment of this rate is entirely voluntary, nearly half a million people currently working for more than 15,000 employers receive it.

The Living Wage Foundation recently recommended that the rate should be £12.60 from next year, rising to £13.85 for those in London.

What impact might the new fee have on businesses?

Some trade organizations have expressed concerns that an above-inflation increase in the minimum wage could put undue financial pressure on employers.

Mo Razzaq, national chairman of the Federation of Independent Retailers (FED), said in September: “Small independent retailers are the backbone of their communities and as responsible employers we want to make sure we pay our staff a fair wage.

“But raising the national living wage to £12.10 would be a step too far. “As well as paying more to our staff, we also have to pay more towards national insurance and pensions at a time when many other costs, including energy, are rising.”

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These fears were further fueled by news that the Chancellor was also considering increasing employer national insurance contributions in his budget on Wednesday.

But TUC general secretary Paul Nowak said: Times He said the Low Pay Commission panel “clearly believed that employers could afford this increase”.

“At a time when the cost of living is still very high, the lowest-paid people will really benefit from a modest increase in the minimum wage. We know that low-wage workers spend more of their cash on local economies. “Therefore, any increase in their spending power will also benefit local companies,” he added.

“Every time there is an increase in the minimum wage, there are some voices predicting that this will increase unemployment. “They are wrong every time.”