National Minimum Wage Increase

1 October 2010

From today (1st October 2010) the National Minimum Wage has increased from £5.80 to £5.93 per hour.

If you are working through an umbrella company this can affect you if you receive a very low or zero commission element in your normal wages.

With an umbrella company you are reimbursed your statutory pay first i.e. your national minimum wage for hours worked and your holiday pay. If you have brought in sufficient income you are then reimbursed for your allowable expenses and any surplus is paid to you via a commission payment.

The effect of the increase in minimum wage could therefore be that your surplus is reduced and you may not be able to receive all of your expenses. This therefore would mean a greater proportion of your earnings are taxable.

In practice this will only affect people who's contracts are at a low contractual rate or people who have a very high proportion of expenses.