It’s that time of the year again! Here’s a reminder of all the employment law changes and updates for April 2023.

New National Living Wage to apply from 1 April 2023 

The Low Pay Commission has made recommendations that the government is implementing in full. The government has a target of the National Living Wage being two-thirds of median earnings by 2024 and as such the NLW will increase by 9.7% to £10.42 per hour for those aged 23 and over. It is estimated that the increase in 2024 will be a lower 6.3%.

Employers should pay particular attention to this change as it may be that employees have been paid £10 per hour which was previously comfortably over the minimum but will no longer meet requirements. 

As a reminder, it is also the employer’s responsibility to keep records proving that they are paying the minimum wage. These records must be kept for at least 6 years if they:

• were created on or after 1 April 2021
• still had to be kept on 31 March 2021 under the previous rule that records must be kept for 3 years

New minimum wage to apply from 1 April 2023:

• 21-22 year olds £10.18 (+10.9%)
• 18-20 year olds £7.49 (+9.7%)
• 16-17 year olds £5.28 (+9.7%)
• Apprentices £5.28 an hour (+9.7%)
• Accommodation offset £9.10 (4.6%)

Redundancy Pay from 6 April 2023:

The limit on a statutory week’s pay increases from £571 to £643 with a maximum statutory redundancy payment.

Unfair Dismissal from 6 April 2023:

The unfair dismissal basic award increases to £19,290. The compensatory award cap for unfair dismissal increases from £93,878 to £105,707.

If you are currently restructuring or applying these caps, the relevant date is usually the date on which the employment effectively ceased or an original contract ended.

For completeness, other benefits, limits and statutory payment changes from April 2023

Statutory maternity, adoption, paternity and shared parental pay from 2 April 2023

Increases from £156.66 to £172.48 per week.

Statutory sick pay (SSP) from 2 April 2023

Increases from £99.35 to £109.40 per week.

Corporation Tax Rates from 1 April 2023

Corporation Tax changes from being payable at a flat rate of 19% (2022/23) to a rate calculated by  how much profit it makes.

• Companies reporting profits over £250,000 - an increase from 19% to 25% 
• Profits up to £50,000 remain at 19%
• Marginal relief will offer a gradual increase for those falling between the two.

Income Tax

The additional rate threshold for income tax will decrease from 6 April 2023 from £150,000 to £125,140

Dividend Tax

The tax-free allowance on dividend income has been cut from April 2023 (£2,000 to £1,000) and then from April 2024 to £500.