Employing younger employees has always been an attractive idea to equestrian businesses, allowing them to build up experience and passion for the sector. However, it is important to keep in mind the National Minimum Wage (NMW) for all employees and what implications there may be when NMW is not paid. NMW is a statutory employment right that guarantees employees a wage not lower than that set by the Government.
The current rates and increases from April 2025 are:
|
|
Current |
From April 2025 |
|
Individuals aged 21+ |
£11.44 |
£12.21 |
|
Individuals aged 18-20 |
£8.60 |
£10.00 |
|
Individuals aged under 18 (and apprentices under 19) |
£6.40 |
£7.55 |
The rates are reviewed annually and change from 1 April each year. The onus is on the employer to ensure that NMW requirements are satisfied, and they should be able to prove that the statute was met if challenged by HMRC.
In order to determine if you are paying your equestrian staff above the NMW the following elements of pay should be considered:
- Gross salary
- Bonuses
- Commissions
- Incentive payments
- Piecework payments
- Accommodation offset
The first five elements are straightforward and easily identifiable. The accommodation offset, however, is more complicated and is applicable where an employer provides accommodation to an employee. This includes an employee living on site as part of their job role, e.g. for added security or safety or because they are starting work early in the morning or finishing late at night.
Accommodation benefits
Many equestrian businesses provide accommodation on site for their employees because it is customary to do so, or to enable the better performance of their duties. This may be provided as part of an employment package, or the employee may be required to pay rent.
Although the accommodation provided to an employee may be an exempt benefit for tax purposes, it will still need to be considered when determining NMW.
The accommodation offset
H M Revenue & Customs set a rate known as ‘the accommodation offset’ that represents the maximum value that can be given towards an accommodation benefit for the purposes of calculating whether NMW has been paid.
The accommodation offset rates are also set in April each year and are currently as follows:
|
|
Current |
From April 2025 |
|
Daily |
£9.99 |
£10.66 |
|
Weekly |
£69.93 |
£74.62 |
If the employee makes a contribution towards the cost of their accommodation which exceeds the amount of the accommodation offset (£9.99) this is treated as a deduction from wages, reducing the total pay reflected when determining whether the NMW has been met. Any contribution up to the amount of the accommodation offset is not considered for these purposes.
For example, if the employee makes a contribution of £7 per night for their accommodation this would be ignored. However, if they were contributing £12 per night their income for NMW purposes would be reduced by £4,380 (£12 x 365).
Any additional expenses an employee is obligated to pay to the employer in respect of the accommodation, such as furniture, rates and utilities, should also be considered when calculating the total accommodation charge.
If an employee is provided free accommodation, employers can add an amount up to the accommodation offset onto the respective employee’s total pay when calculating wage for the purposes of NMW.
For example, if a yard groom was earning a basic wage of £20,800 (£10 per hour for a 40-hour week) and living on site full time rent free, their total income for NMW purposes would be £20,800 + (52 x £69.93) = £24,436.36. This is equivalent to £11.74 per hour, so within the NMW requirement for someone aged 21 or above. From April 2025, allowing for the increase in the accommodation offset, the hourly rate would need to increase to £10.35 to continue to meet the NMW requirement.
Failure to meet NMW
It is not uncommon for H M Revenue & Customs to investigate where they believe the NMW is not being paid.
Due to the long hours worked by equine employees a drop below the NMW can sometimes go unnoticed by both employee and employer. It is, therefore, essential to maintain sufficient records for a minimum of six years from the end of the applicable pay reference period to evidence employees have received the NMW applicable to their age category.
If HMRC determine that an employer has not paid NMW, the business may be issued with a notice of underpayment. This will require the employer to settle salary arrears. In addition to this, a hefty penalty may be levied against the employer. The employer may also be publicly ‘named and shamed’ online by HMRC.
Please contact us if you would like assistance to check you are meeting the NMW criteria in your equine business.
