Chancellor Jeremy Hunt promised a national wage increase to “at least £11 an hour” for over 23-year-olds, up from from the current £10.42, during his speech at the Conservative Conference.
Ignoring the growing calls for tax cuts within his party, Mr Hunt pledged to achieve the target set last year for the national living wage to reach two-thirds of median hourly pay by October.
The Low Pay Commission said the rate to meet the the target was between £10.90 and £11.43 – with a sweet spot central estimate of £11.16.
So how much could this rise actually earn you in a year, and when does it come into effect? Here’s everything you need to know.
How much will I earn in a year?
The national wage increase is expected to apply to more than two million workers who are on minimum wage. The Tories said this would mean the annual salary of a full-time worker on the national living wage would increase by £1,000 next year.
So, an £11 an hour rate would see you earn £22,880 a year, based on a 40-hour working week in a a full-time job, including paid holiday. If you’re paid once every two weeks, your paycheck would be £953.33, with a weekly salary of £440. If you’re paid per day, this works out to £88.
However, you’d fall into the 15 per cent tax bracket, meaning you’re likely to end up paying £2,060 in income tax on that sum, with a national insurance contribution of £1,366 – meaning your take home pay would be more like £19,454.
Along with the Work and Pensions Secretary Mel Stride, Mr Hunt is planning to make it more difficult for people to claim benefits in November’s Autumn statement, which could lead to tightening belts.
When will it change?
An exact date is yet to be confirmed, but it is expected to come into effect in April 2024, and is already shaping up to be a key election proposal for the Conservatives.
Mr Hunt said: “The wages of the lowest paid are over £9,000 a year higher than they were in 2010 – because if you work hard a Conservative government will always have your back.”
The Prime Minister said: “We’re sending a clear message to hard-working taxpayers across the country: our Conservative Government is on your side.”
The current Parliament is set to be automatically dissolved next December, but Rishi Sunak is widely speculated to call an election sooner than this.
