You could have more money in your pocket from next month. That’s because the National Living Wage is set to rise by 30p an hour to £7.50 from April 2017 in new plans confirmed by the Chancellor Philip Hammond in his Budget 2017 speech.
The Personal Allowance – the amount of money you need to earn before you pay tax – will also change from 6 April 2017. To find out how this will affect you, we're taking you through what's changing.
National Living Wage
The National Living Wage – you’ll get at least this if you’re a worker aged 25 or over – will rise from £7.20 to £7.50 an hour from next April.
You'll receive an extra 30p an hour or an annual increase of £500 if you work full-time. The Government has said previously that it plans to raise the National Living Wage to £9 an hour by 2020.
The National Living Wage is the lowest amount you can receive for work if you're aged 25 or over. It's higher than the compulsory National Minimum Wage – paid to apprentices and workers under the age of 24 – which will increase to £7.05 from £6.95 an hour from April 2017 for 21-24 year olds.
The Living Wage is still higher than the National Living Wage. The Living Wage Foundation set the Living Wage based on the amount employees and families need to live. Your employer doesn’t have to pay you the Living Wage. The current UK Living Wage is £8.45 an hour, while the London Living Wage is £9.75 an hour.
You can find out the difference between National Minimum Wage and Living Wage in our blog.
Chancellor Philip Hammond also announced during his 2017 Budget speech that the Personal Allowance will rise by £500 to £11,500 from April 6 2017.
The Personal Allowance is the amount you can earn before you pay tax. This means you can now earn an extra £500 a year before the Government taxes your income. However, as the National Living Wage has increased by 30p, this works out at an extra £500 a year on full time hours. So it's likely you'll still pay tax on your income.
But this increase shouldn't affect any benefits that you claim. You need to earn a low income and have no more than £16,000 in savings to be eligible for certain benefits. You're entitled to wider range of benefits and tax credits if you work less than 16 hours a week.
Work longer hours? Find out what benefits you could get if you work 16 hours a week or more.
You could start to pay more National Insurance if you're self-employed after the Budget 2017 speech. Find out what the Budget 2017 means for you and your money.