Our clients at Your Tax Shop, based in Ashton, look to employ apprentices, recognising this as a cost-effective way to upskill their workforce and future-proof their organisation. Most recognise that apprentices tend to become more loyal employees, in the long run, helping to introduce new perspectives and foster a culture of innovation within their organisation.

To ensure you are paying apprentices the correct hourly rate it is important to understand how this is calculated. Your Tax Shop, Tameside will explain this.

Depending on the circumstances, some apprentices will be entitled to the apprenticeship rate, whereas others will be entitled to the normal age-related rate of National Minimum Wage (NMW). The current apprenticeship rate stands at £3.70 an hour and represents the legal minimum for those who are either under 19, or 19 and over but in the first 12 months of the employment. Clients need to be aware that once an apprentice is aged 19 and over and is not in the first 12 months of the employment, they will become entitled to the minimum wage rate that is applicable for their age, up to and including the National Living Wage of £7.83 an hour.

Importantly, recent efforts from HMRC have shone a light on organisations who for several reasons have failed to abide by NMW laws. This recent ‘naming and shaming’ exercise revealed that 239 employers from a variety of sectors had failed to pay staff the correct hourly rate, resulting in the issuing of £1.97million worth of fines. Not surprisingly, one of the most common reasons given by employers for their transgression was a failure to understand the rules surrounding apprenticeship pay, particularly when these individuals were entitled to NMW.

With the above in mind, you should first make sure apprentices are being brought in on the correct hourly rate, in line with the minimum apprenticeship rate. It is also important to make sure that apprentices’ age and length of service are accurately recorded as this will help determine when salaries need to be amended as apprentices’ progress through the NMW age boundaries. For this, human resources and payroll departments must work together to keep up to date personnel files to avoid any underpayments. It is also advisable to issue apprentices with written confirmation as and when their hourly rate changes to increase clarity around this issue.

If the continued efforts of HMRC have told us anything it is that clients will no longer be able to get away with not understanding NMW requirements. Therefore, if you are to continue to enjoy the undoubted benefits that come with offering apprenticeships then care must be taken to ensure these individuals are paid correctly throughout their employment.

Should you need any further help then please do not hesitate to contact one of the Your Tax Shop team on 0161 3395689.