Guidance

Carrying out a self-review of the National Living Wage and the National Minimum Wage — NMW FS2

Updated 3 May 2024

We’re carrying out checks to make sure you’re paying the National Minimum Wage (NMW) to your workers.

As part of these checks, we asked you to carry out a self-review of your records. This factsheet gives you more information about what you need to do.

The NMW is the minimum amount that employers must pay their workers by law. You’re responsible for making sure that you pay your workers at least the NMW rates.

From 1 April 2016 the NMW includes the National Living Wage (NLW). NLW is higher than the NMW. Workers get it if they’re over 23 years old. Where I refer to NMW, this also covers NLW where appropriate.

If you need help

If you have any health conditions or personal circumstances that may make it difficult for you to carry.

out the self-review, please tell the officer who contacted you. We’ll help you in whatever way we can.

Find out how to get help from HMRC if you need extra support.

You can give written permission for someone else to deal with us on your behalf, for example, a professional adviser, friend or relative. We may, however, still need to talk or write to you direct about some things. If we need to write to you, we’ll send a copy to the person you’ve asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.

How to carry out the self-review

Our case officer should have agreed the scope of the review with you. They should have told you which periods and workers to include.

The size and scope of your review depends on several factors. These include:

• the size of your workforce
• the type of work your workers carry out
• the number of workers who may not have been paid at least the correct rate of NMW
• changes to the NMW rates
• changes in the contracted hours or pay rates of your workers

You may find that you have not paid the correct amount of NMW to some of your workers for the period we asked you to check. If so, you will also need to check other periods. You should do this until you no longer find any workers that you have paid incorrectly.

How to work out any amounts of NMW you may owe

You must treat each pay reference period separately when working out if you’ve paid the NMW. This means that if you’ve paid more than the NMW in one pay period, you may not be able to offset that overpayment against an underpayment in another pay period.

When working out any amounts you owe, use the current NMW rates to work out the arrears. This means that if the NMW rates have increased, the amount you owe will be greater than the amount you underpaid.

Follow the steps below to work out what you owe.

1. Work out the amount of the original underpayment in the pay reference period.
2. Divide that amount by the NMW rate which applied at the time of the underpayment.
3. Multiply that figure by the current NMW rate.

For more information on working out any amounts you might owe, including any increases, go to:

• find out more about the NMW and NLW calculator for employers
• find out more about Calculating the minimum wage

What happens next

After completing the self-review, you must send your calculations to us. For all underpaid workers and for each pay reference period, you need to give us:

• name, addresses, date of birth, payroll number and National Insurance number
• details of the hours worked
• details of gross pay received by each worker, including a breakdown of any additional pay
• details of any deductions or amounts workers have paid to the employer
• the amount of underpayment for each worker
• the amount of arrears you owe to each worker — use the method above
• any arrears you owed to the worker which you’ve now paid
• any arrears which you have still not paid

When we’ve looked at your self-review, we’ll let you know what you need to do next. You can find more information about this in the letter enclosed with this factsheet.

It may be that the NMW rate increases between the date you work out the amount owed and

the date you repay it. If that happens, you’ll owe the worker an extra amount to take account of the new rates.

Information you must keep

You must keep (all of the following):

• details of the method, size and scope of your review
• details of how you worked out the amounts
• all supporting information

This is because we might carry out a NMW check on your records in the future. If we do, you’ll need to give us this information.

Your adviser

If you want to appoint an adviser to act on your behalf, you’ll need to send us an Authorise a tax agent (64-8) form.

You can also get one by phoning:

• the number in our covering letter
• our orderline

More information

If you would like more information:

• phone us on the number in our covering letter
• read our guidance about the NMW and NLW
• check HMRC email updates, videos and webinars for employing people — this offers NMW and NLW webinars and eLearning

DBT guidance about the NMW

Acas provides free, confidential advice in over 100 languages. Find out how to contact their helpline on their website.

You can find out more about current and past rates of the NMW or the NLW.

Your rights and obligations

The HMRC Charter explains what you can expect from us and what we expect from you.

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you.

If you’re not happy with our service

Please tell the person or office you’ve been dealing with. They’ll try to put things right. If you’re still not happy, they’ll tell you how to make a formal complaint.