In recent months, many employers have received letters from HMRC encouraging them to check their compliance with National Minimum Wage (NMW) rules. While this kind of official communication can cause concern, it is important to understand that this is not a formal investigation or penalty notice.
This type of contact is known as a nudge letter. It is intended to prompt employers to carry out their own internal checks on pay and processes. There is no obligation to respond to HMRC or report your findings, but it is a good opportunity to review your practices and make sure you are fully compliant.
Why it is important to take action
NMW compliance is not always straightforward. It goes beyond simply paying the correct hourly rate. Issues can arise if deductions are made for things like uniforms or equipment, or if unpaid training time or rounding of hours results in employees receiving less than the legal minimum.
Even if you are confident that you are paying correctly, it is worth taking the time to review your processes to avoid any risk of non-compliance.
What could happen next?
In some cases, HMRC may follow up this letter by offering a free support call with one of their NMW experts. This is a risk-free opportunity to ask questions and put things right without facing penalties or public naming.
However, HMRC has confirmed that employers who choose not to take up this offer are more likely to be selected for a formal NMW investigation.
The risks of non-compliance
If HMRC carries out a full NMW review and finds that underpayments have been made, employers may be required to:
- Repay arrears to both current and former employees, uplifted to current NMW rates
- Pay penalties of up to 200 percent of the arrears
- Face public naming if arrears exceed £500
The financial and reputational impact of non-compliance can be significant, which is why it makes sense to act early.
The current National Minimum Wage rates (from April 2025)
- 21 and over (national living wage): £12.21 per hour
- 18 to 20 year olds: £10.00 per hour
- 16 to 17 year olds: £7.55 per hour
- Apprentices: £7.55 per hour
How SMH Group can help
At SMH Group, our payroll team supports hundreds of businesses to stay compliant with National Minimum Wage rules. If you have received a letter from HMRC, or if you are unsure whether your current pay practices are fully compliant, we are here to help.
Contact our payroll team on info@smh.group or call 0114 266 4432.
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