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HMRC increases minimum wage and introduces real time PAYE reporting

HMRC officials have increased the UK’s National Minimum Wage (NMW) for adults and apprentices. The changes, effective from 1st October 2012, will see approximately one million of Britain’s lowest paid workers benefit from pay increases. The adult NMW has increased by 11p to £6.19 per hour, while the apprentice rate has increased by 9p to £2.65 per hour. The rates for 18-20 year olds and 16-17 year olds remain unchanged.

The minimum wage was introduced in 1999 at £3.60 an hour for adults. The latest changes to minimum wage levels mirror recommendations made by the Low Pay Commission. The NMW freeze among young workers follows the commission’s belief that young people should be incentivised to remain in education or training.

Employers may also be interested to know that real time PAYE reporting will become mandatory from April 2013. HMRC will require the vast majority of employers to begin using its Real Time Information (RTI) system to routinely report every payment.

Companies operating their own payroll will need to take the appropriate action to either update or obtain new payroll software. Meanwhile, companies using an external payroll service provider should check that they are updating their software as necessary.

HMRC is writing to all employers during the course of this month to explain what RTI means to them, and will provide details on how they can prepare their business for the forthcoming PAYE reporting changes. It is also working closely with a number of relevant bodies to help spread the word and communicate what action needs to be taken.

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