Perhaps one of the more surprising announcements made by George Osborne during the Budget last week was that a new national minimum living wage will be introduced from April 2016. The national living wage will be set at £7.20 per hour and is expected to increase to £9 by 2020. It will be payable to those aged 25 and over.

Bearing in mind that the national minimum wage will increase from £6.50 to £6.70 in October this year, the introduction of the national living wage is still a significant leap – 50p above what the national minimum wage will be at the point when the living wage is introduced. This will have a huge impact on businesses and on particular sectors that have traditionally high volumes of employees receiving the national minimum wage, or a little over it.

The introduction of the national living wage will of course also be relevant when calculating an employee's entitlements such as holiday pay.

George Osborne stated that in order to set off the costs of the national living wage, corporation tax would be reduced to 19% in 2017 and by a further 1% in 2018 and furthermore that the employment allowance will be increased from £2,000 to £3,000 in order to assist businesses.