If imposed, the minimum wage will have increased by over £10,000 since 2021, a percentage increase of 63.15%.
The gross minimum pay increases from £17,160 in 2021 to a projected £27,996 in 2026.
Whilst many believe the worker has benefited equally from that percentage increase, the figures show a different story.
Although gross pay has increased by over £10,000, the net pay for workers is far less than that with employees projected to take home £23,811 if the new rate of pay is implemented in April 2026.
Cash in Whose Pocket?
The people of the Isle of Man have consistently heard from the Treasury Minster Dr Alex Allinson MHK that the pay increase will put “more money in peoples pockets”.
But, whose pockets will it be lining? Looking at the data, it is clear to see that government will be the beneficiary of the pay increase and have more money it its pocket.
Whilst the gross pay has gone up 63.15%, the net pay increase is 51%.
However, as of April 2026 government will be taking 15% of the wage in National Insurance and Income Tax.
In 2021, government took 8% of the minimum wage pay.
Threshold Debate
The tax due for those on minimum wage has also skyrocketed since 2021. Five years ago, those on minimum wage were paying £291 on tax due at 10%.
As of next year, those people on minimum wage will see their 10% tax increase by over 123% since 2021.
Equally, as the wage has gone up, more people have seen that they are having to pay the higher rate of tax due to thresholds not changing.
From 2023, those on the “low wage” were paying £272 a year of the higher rate.
However, from next year those workers will be paying £1,416 of the higher rate of tax on top of their £650 of 10% tax, equating to £2,066.
More Tax For Govt
Thanks to the minimum wage increase, those on minimum wage will be paying £4,185 in tax and NI.
Compared to £1,389 in five years ago in 2021, that is a 201.2% increase.
If the 2021 personal tax allowance was adjusted over the six years by inflation, it should be close to £20,000 per person by the next budget.
The personal tax allowance threshold sits at £14,750 after being given a token £250 increase by Treasury in the 2025 budget.
In addition to the increased minimum wage paid required to be paid by employers, employers pay 12.8% on all earnings above the threshold.
