HMRC probes National Minimum Wage payments

by Michael Blaken

HMRC is stepping up scrutiny over National Minimum Wage compliance across the UK. Recent regional campaigns mean more businesses are receiving letters to discuss payroll practices.

While these approaches are informal, they can easily trigger deeper reviews. Plus, National Minimum Wage enforcement shifts to the new Fair Work Agency in April 2027, bringing a much broader oversight.

To stay protected, organisations need to be able to spot risks early.

Common Compliance Pitfalls

Minimum wage breaches usually stem from oversight rather than deliberate underpayments. Frequent risk areas include:

• Deductions and Benefits: The impact of salary sacrifice or accommodation on base pay.
• Unpaid Preparation Time: Staff arriving early or staying late to open or close premises without pay.
• Additional Training: Completing mandatory training outside of rostered hours.
• Travel Between Sites: Failing to account for travel time when staff move between work locations.
• Uniform and Dress Codes: Work clothing costs that pull earnings below the legal minimum.

HMRC enquiries tend to focus heavily on operations and working patterns. This means, knowing how your team actually works is vital.

Proactive Steps for Employers

National Minimum Wage compliance extends beyond paying the correct hourly rate. Employers should regularly review their payroll processes, deductions, working practices, salary sacrifice arrangements and record keeping, identifying and addressing potential risks before they lead to costly liabilities.

One obvious way to avoid issues is to outsource payroll to professionals, like the team here at Optimum.

With HMRC scrutiny in full swing, you are now more likely, as a business, to receive at letter. If you do, engage with us early to resolve issues before they escalate.

With the Fair Work Agency taking over in April 2027, employment compliance will face even tighter scrutiny. Strengthening your internal controls and processes now protects your business against future changes alongside providing comfort should an HMRC enquiry arise.

If you are an employer, and would like to know more, please get in touch.