Minimum wage in the UK 2024 – everything you need to know
2024 has brought changes to minimum wage rates in the UK, directly affecting the incomes of millions of workers and businesses operating in the UK. Knowledge of the current minimum wage legislation is a key issue for both full-time workers and businesses employing staff – this knowledge should also be possessed by Poles living and working in the UK, for whom the difference between the Polish and UK pay systems is particularly important.
In the following article, we will discuss the most important information about the UK 2024 National Minimum Wage and present the current rates in force this year. We will also explain what elements make up gross pay and the differences between the UK and Polish systems. You will find practical information to help you better understand the rules and adapt to the new requirements – please read on.
Current national minimum rates in the UK in 2024
New minimum wage rates were introduced in the UK in April 2024. The amount of pay depends on the employee’s age and employment status. UK minimum hourly rates vary for different age groups:
- rate of £11.44 per hour applies to workers over 21. This is known as the National Living Wage;
- 18-20 year olds receive £8.60 per hour;
- under-18s can expect to be paid £6.40 per hour (the so-called National Minimum Wage – NWM);
- The rate for apprentices is also £6.40 per hour, but applies to those who are younger than 19 and are in the first year of their apprenticeship.
Introduced each April, the update is designed to reflect the rising cost of living and provide more support for those on the lowest incomes in the face of rising inflation. In doing so, it is worth noting that the changes in 2024 are ground-breaking – this is the first time that the National Living Wage can be claimed by people aged 21 and over (in the past the NLW has applied to those under 23).
Gross versus net pay – what is it like in the UK?
As in the Polish tax system, gross pay in the UK is the amount an employee sees on their contract before taxes and contributions are deducted. However, the amount they actually receive ’take home’ is usually noticeably lower. Key deductions from salary include Income Tax and National Insurance Contributions (NICs).
Gross pay components:
- Income Tax
In the UK, income tax is calculated on the basis of progressive rates:
- 0% on earnings below the tax-free threshold, set at £12,570 per annum in 2024;
- 20% on earnings between £12,571 and £50,270 (the so-called basic rate);
- 40% on income over £50,270 (the so-called higher rate).
In addition, earnings above £125,140 are subject to tax at a rate of 45% (the so-called additional rate).
- National Insurance Contributions (NIC)
National insurance contributions, like tax, depend on the level of earnings and it is best to present them in weekly calculations:
- those earning more than £12,584 per year must pay a contribution of 8% on income between £242.01 and 967 (between approximately £12,584 and £50,284 per year);
- on income over £50,284 the contribution rate is 2%.
Example of net salary calculation
How much do you earn on the national minimum wage in the UK? Let’s assume a worker earns £11.44 an hour, which in 2024 is the rate equal to the National Living Wage for over-21s. Assuming that they work a traditional ‘full-time’ job of 40 hours per week, their gross monthly salary will be:
£11.44 x 40 hrs x 52 weeks / 12 months = £1,982.93 gross monthly.
Taxes and National insurance contributions will be deducted from this amount.
- Income tax: At this level of earnings, the annual salary will be around £23,795.20, so the employee pays 20% tax on the amount above the tax-free threshold (£12,570), which equates to around £2245.04 per year, or around £187.09 per month.
- National Insurance Contributions: Of this amount, we pay 8% NICs on salaries between £12,584 and £50,2584, which amounts to around £74.74 per month.
After deducting income tax and NIC contributions, the employee receives approximately £1,721.10 net per month.
Comparison of the British and Polish systems
The remuneration system in the UK differs from Poland not only in terms of the UK minimum wage, but also in the way wages are calculated. Poland has a single, nationally determined gross minimum wage that is the same for all employees – regardless of age or type of employment.
In the UK, the system is more complex, as the minimum hourly rate in the UK depends on the age of the worker. In addition, the UK tax system and rules for National insurance contributions differ from those in Poland. In Poland, National Insurance contributions are fixed, whereas in the UK, National Insurance contributions may vary according to earnings.
How the introduced changes affect earnings in 2024?
Changes introduced to UK minimum wage rates for 2024 have major implications for Polish businesses and workers. Workers earning the minimum wage in England can expect an increase in their gross earnings, which, in view of the rising cost of living, is particularly important. On the other hand, for entrepreneurs, this means an increase in employment costs, which may require more careful company budgeting to ensure that all employees are paid their due salaries.
Want to know more about minimum rates in the UK?
The changes to the UK minimum wage regulations in 2024 is a topic that requires close attention. To function properly in the UK labour market, both employees and businesses need to be aware of the new regulations. Let’s also remember that understanding the differences between gross and net pay, as well as between the Polish and UK pay systems, allows for better financial planning and avoiding legal problems.
If you have questions about the minimum wage in the UK or need help with accounting and finance issues, please contact us. Essence Accounting offers professional advice to help you understand and comply with current legislation.
