National Minimum Wage2014

The minimum wage for over 21s is set to rise by 3 per cent to £6.50, up from £6.31. The rise is the highest for some years, and follows George Osborne's call for workers to be rewarded as the economic recovery gains momentum

The Low Pay Commission said it was just the start of a ‘new phase' which would take the rate to new higher levels, and possibly up to £7 per hour within a few years.

But what does it mean to you if you earn the NMW of 6.31 per hour? Well, at 19 pence per hour, if you work an average of 37.5 hours per week, your total pay will go up by £370.50 per year, which equates to £7.12 per week.

On the increase, however, you will pay additional tax of £1.42, and National Insurance of 85 pence. 7 pence may also be deducted from your pay for pension contributions, but this will be added to you pension scheme, and the same again would be added as the contribution by Extraman.

So, your net pay each week would be higher by £4.77, with 14 pence being added to your pension fund, if applicable. Over the course of the year, therefore, your net income will go up by about £248.

In summary:

National Minimum Wage up by 19p per hour

Gross pay for 37.5 hours per week up by £370.50 per year, or £7.12 per week

Net pay for 37.50 hours per week up by £248 per year, or £4.77 per week