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Lloyd & Co
Chartered Accountants

103-105 Brighton Road
Coulsdon
Surrey, CR5 2NG
020 8668 0500
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Source: HM Revenue & Customs | | 20/03/2018

From 1 April 2018, the National Living Wage (NLW) will increase by 33p to £7.83. This represents an increase of 4.4%. The NLW is the minimum hourly rate that must be paid to those aged 25 or over. For the 21 to 24 year old’s, the hourly rate of the National Minimum Wage will increase to £7.38 (a rise of 33p).

An interesting question to consider is whether or not company directors need to be concerned with employment legislation in relation to the minimum wage. At the most basic level, company directors or any other person who have been appointed to a position by a company or organisation, but do not have a contract or receive regular payments are defined as office holders. Office holders are neither employees nor workers.

Company directors who have an employment or worker's contract can be both an office holder, and an employee at the same time if the director has an employment contract. If this is the case, the director would need to be paid either the NMW or NLW.

Where there is a requirement to pay a director the NMW or NLW, this would severely impact the often-used strategy to pay a director’s salary at a level that qualifies the director for state benefits but does not involve payment of any NICs.

Planning note

Careful consideration needs to be given, especially to directors of personal service companies to ensure the correct tax treatment is in place, whilst at the same time complying with employment law and minimum wage legislation.



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