Increase to National Minimum Wage may affect expenses
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On Thursday 1st October 2015, the National Minimum Wage (NMW) for those aged 21 and over will rise from £6.50 to £6.70.
This doesn’t affect me, does it?
Well, the NMW determines the maximum amount of expenses that can be processed with each of your payments.
How is the maximum level of expenses determined?
Expenses reduce your taxable income, but they cannot reduce it below the NMW.
This means that from October. you must pay tax and National Insurance on at least £7.51 per hour. Previously, it was £7.28. This figure is higher than the NMW because it takes into account your holiday pay, which is paid to you in advance as part of your rate.
Once your expenses have reduced your gross salary to £7.51 per hour, no more expenses can be processed with that payment.
What happens if I claim more than the maximum?
But don’t worry! Your Closing Balance will automatically be carried over and used in future payments, whenever possible.