Whilst we associate April with Easter, springtime, and new beginnings, it also signifies the start of the new tax year on 6th April, and with this comes a range of new financial measures that employers and employees need to be aware of.
Rob Shaw, Managing Director at South Yorkshire based Recruitment specialists, Glu Recruit, looks at how increased costs will affect businesses as the soaring cost of living is set to bite.
National Minimum Wage (NMW)
The NMW will rise by 82p per hour in April, amounting to an overall increase of over £1,000 for the average worker. There are, however, differing rates depending on age, so businesses will need to ensure they are paying the going rate to their employees.
The new rates are as follows:
- Apprentices: £4.81 an hour
- 16-17 year-olds: £4.81 an hour
- 18-20 year-olds: £6.83 an hour
- 21-22 year-olds: £9.18 an hour
- 23 and over: £9.50 an hour (National Living Wage)
This applies to both existing employees as well as any new recruits you take on from 6th April, so make sure your payroll is up to date to remain compliant with the new rates.
Wages in general
We’ve seen an overall increase in wages over the past 12 months, largely due to the power shift from employer to employee because of the pandemic.
Some businesses have resorted to paying over market value to keep their valued employees happy, which in turn means candidates who are actively seeking a new role are able to demand more to move.
Remember, an increase in salary also means an increase in other associated costs of employment, such as pension contributions, insurance, expenses, employee benefits and tax.
Increase in National Insurance
Coupled with the rise in wages, both employers and employees are also facing a tax hike as National Insurance contributions rise from 6th April.
This will hit employees in the pocket as they will have less take home pay, but it will also affect businesses as employer contributions will also increase – both incurring a 1.25% increase. A double whammy for businesses affected by the NMW increase as well.
Cost of living
It’s a concerning time for everyone as the cost of living crisis takes hold. Households will be feeling the pinch of increased food, fuel, and energy costs, but this is also going to affect businesses too.
The energy price cap is increasing in April by over 50% which will affect anyone with an office or production facility, and there has been a sharp rise in fuel costs as well which will affect businesses who run fleet transport or company cars.
Adding to this is the gradual increase in interest rates, which stand at 0.75% but are expected to rise further by the end of 2022. This will affect mortgages, loans, and financing on both a consumer and a business level.
Value your vacancy
The need to recruit isn’t going away, in fact it is stronger than ever before as job vacancies hit a record high of 1.3 million and unemployment falls to 4.1% – which is only slightly above pre-pandemic levels.
With businesses facing increased costs across the board, making sure you pitch the salary of any vacancies you need to fill is more important than ever. You need to be competitive to attract the best possible candidates to the position, but you also need to be realistic to ensure you are not paying over the odds.
Of course, there is more to a job than just a salary, which is where Glu Recruit can add serious value to your recruitment and retention process, but the salary is always a good starting point when assessing your options for new recruits, or even keeping your top performers happy.
Glu have developed a new ‘Value Your Vacancy’ tool which can help. Click here to see where to pitch your latest vacancies and start budgeting for your new recruits in April 2022.