01 Oct, 2012

Minimum wage and VAT changes take effect

A rise in the earnings of the lowest paid workers has come into effect but athletes and hairdressers are likely to see their tax bill increase.    Various changes to the UK tax and benefits system come into force on 1 October.   These include an increase in the UK minimum wage from £6.08 to £6.19 an hour. The rate for those aged under 21 remains unchanged.

Meanwhile, VAT will now be levied on sports drinks and hairdressers’ chairs.   The government announced in March that the minimum wage would rise by 11p. This 1.8{6060b2de664e4eaa3e7b7e86961ce2c4bbd7a29b6c1097abf8257a4e5b07383e} rise is slightly lower than the typical rise in earnings and the current rate of inflation, which represents the rising cost of living.

The freeze in the minimum wage for those aged under 21 means that:

  • The rate for 18 to 20-year-olds remains at £4.98 an hour
  • The rate for 16 and 17-year-olds remains at £3.68 an hour
  • However, the rate for apprentices rises by 5p to £2.65 an hour

The minimum wage was introduced in 1999 at £3.60 an hour for adults. The latest setting for minimum wage levels mirrors recommendations from the Low Pay Commission.

Credit: BBC/Reuters/APD


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