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Charities and the National Living Wage

By Natalie Ponting on 14 Jul 2015

In the 2015 summer Budget, George Osborne, the Chancellor of the Exchequer, introduced a new National Living Wage (NLW) of over £9 an hour by 2020.

This will replace the current minimum wage, which is currently £6.50 an hour for those aged 21 and over. The new NLW will be set at £7.20 an hour for those over 25 from April 2016, rising to at least £9 an hour by 2020.

To help offset the increased costs for employers from the new NLW, the government has pledged to increase the national insurance contributions employment allowance – the amount that can be claimed back from an organisation’s NI bill – by £1,000 to £3,000 a year from April 2016. "This will help all businesses and charities, particularly smaller ones, with additional wage costs," the main Budget document says.

However, representatives from the charity sector are concerned that if payments from government contracts and grants are not also increased, it will leave charities considerably worse off.