New National Living Wage to cost small businesses £1.67bn
A third of the UK's small and medium sized companies are unaware that the new measure will come into effect on April 1
The UK’s small and medium-sized businesses are to be hit with an estimated £1.67bn in additional costs as a result of the new National Living Wage, according to research by Moorepay.
The analysis of 4,500 businesses found that the UK’s 1.7 million eligible employees will earn an average of £950 more each year when the new National Living Wage of £7.20 an hour is introduced on April 1.
The research also revealed that a third of businesses are unaware of what date the increase is being implemented, while the vast majority (86%) of businesses weren't clear on how the changes would impact their bottom line.
Last year, research from the Federation of Small Businesses (FSB) suggested the impending increase would slow job creation and hike up prices for small businesses.
With the National Living Wage expected to increase to £9.00 per hour by 2020, businesses are advised to budget for a minimum increase of 45p per hour every year until the 2020 deadline to ensure they remain compliant.
Alison Dodd, managing director of Moorepay, commented: “Our research shows that many small businesses are apparently still unaware of the impending introduction of the National Living Wage.
“What is more worrying is the number of companies that have little understanding of the financial impact this change will have on their business. It’s not just the higher wages bill that will affect their bottom line but the associated costs, such as national insurance, pension contributions and overtime pay.”