National Minimum Wage Under the Spotlight: HMRC Letters Sent to Employers

Post Author:

Rona Burns

Date Posted:

June 9, 2025

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Categories:

Company News , Payroll

HMRC have recently issued formal notices to employers across Central Scotland about the National Minimum Wage (NMW).  This proactive campaign is part of a wider effort by HMRC to ensure compliance with NMW legislation and to address underpayment risks before formal compliance checks are carried out.

For many businesses especially SMEs, receiving such a letter can cause concern, but it also presents an opportunity to review payroll practices, spot errors and take corrective action if needed.

The National Minimum Wage (NMW) is a fundamental aspect of UK employment law, ensuring that all workers receive a fair rate for their work.  As an employer, it’s crucial to stay compliant with NMW regulations, not only to avoid penalties, but also to maintain a positive reputation and workforce morale. Here’s what you need to know.

What is the National Minimum Wage?

The NMW is the minimum hourly rate that most workers in the UK are entitled to. The rates are reviewed annually and vary depending on the worker’s age and whether they are an apprentice.

Key Areas to Review

Deductions from Pay

If you deduct money from wages for:

  • Uniforms or dress codes
  • Meals, transport or savings schemes
  • Tools or equipment
  • Salary sacrifice arrangements, such as childcare vouchers, cycle to work schemes and salary sacrifice pension schemes

These deductions reduce the hourly rate and could result in an underpayment of the NMW.

Paying for All Time Worked

Employers must pay for:

  • Travel time between job sites
  • Mandatory training (even if done at home)
  • Tasks performed before or after official contracted hours/shift times

Failing to account for this time could lead to non-compliance with the NMW.

Record Keeping

Employers are legally required to keep records to show that they are meeting their NMW obligations.  From April 2021, these records must be kept for a minimum of six years.  HMRC can request these records at any time.

National Minimum Wage Rates (as of April 2025)

Category Hourly Rate
Age 21 and over £12.21
Age 18 to 20 £10.00
Under 18 £7.55
Apprentice £7.55

Ensure that apprentices are paid for study time and are moved to the correct rate after their first year if they are aged 19 or over.

What You Should Do Now

Final Thoughts and How We Can Help

This isn’t just about avoiding penalties, it’s about fairness, transparency and trust in the workplace.  Taking the time to ensure compliance now can save your business from costly investigations later.

It’s also worth noting that HMRC regularly publishes the names of employers who fail to pay the minimum wage. This “naming and shaming” can cause significant reputational damage, in addition to financial penalties.

If we process your payroll, our Payroll Team at Johnston Smillie are always happy to answer any questions you may have on this subject.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Colin Watts on Unsplash

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