National Minimum Wage and National Living Wage - calculating minimum wage pay

Deductions and payments that do not reduce minimum wage pay


When you make a deduction from a worker's pay, it will reduce minimum wage pay if it is for expenditure connected with the employment or if it is for your use and benefit.

However the following deductions from workers' pay and payments by workers connected with their employment do not reduce their minimum wage pay:

  • deductions of income tax and National Insurance contributions (NICs)
  • deductions from pay allowed under the worker's contract which relate to specific misconduct or payment by the worker of a specific penalty
  • deductions from pay or payment by the worker because of an advance of wages or on account of an advance under an agreement for a loan deductions from pay or payment by the worker for purchase of shares or securities by the worker
  • deduction from pay or payment by the worker to recover an accidental overpayment of wages
  • deductions from pay that are not for expenditure connected to the worker's employment or for your own use or benefit - for more information see deductions not connected to a worker's employment or for the employer's own benefit
  • voluntary payments by the worker for the purchase of goods and services from you - for example payments for meals the worker has freely chosen to buy in the staff canteen - but note a deduction in these circumstances will reduce National Minimum Wage pay
  • certain deductions from pay and payments by the worker for accommodation provided