The budget announced that the National Minimum Wage will increase in October 2014. Umbrella Company employees are paid at the National Minimum Wage Rate, a reimbursement of allowable expenses and a bonus or commission based on the surplus they generate. An increase in the national minimum wage can affect lower paid contractors meaning that if they fail to generate adequate income then they may not be eligible for the whole of their tax free expenses.

This could potentially lower how much they take home and although the drop would be small it would not be good for lower paid contractors. National Minimum Wage 1.179 The Low Pay Commission’s (LPC) recommendations for increases in the National Minimum Wage (NMW) rates have been accepted by the government. The adult NMW rate will increase by 3% to £6.50 from October 2014, representing the largest cash increase since 2008 and the first real terms increase since 200.

There will also be increases of 2% for the youth and apprentice NMW rates from October 2014. As a result, over a million people will see a pay increase.63 Beyond 2014, the LPC has made clear that it shares the government’s aim for further real terms increases beyond this, with the real value of the minimum wage restored and exceeded in time, provided economic conditions continue to improve.

The full budget is available below: https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...