The National Minimum Wage plays a central role in workforce planning, payroll management and compliance across every sector in the UK. Each April the statutory rates rise, and the increases for 2025 and the announced uplift for 2026 will create direct cost pressure, particularly for employers with large numbers of entry-level or hourly staff. Understanding the new rates and how they operate in practice helps avoid underpayment risk, unexpected arrears and HMRC enforcement.
National Minimum Wage Rates
From 1 April 2025, the National Living Wage for workers aged 21 and over rises to £12.21 per hour. This continues the shift made in 2024, when eligibility for the National Living Wage was extended from age 23 to age 21. Younger workers also see significant increases. The 18 to 20 rate rises to £10.00 per hour, while the 16 to 17 and apprentice rates both increase to £7.55 per hour. These uplifts are designed to narrow the gap between youth rates and the adult rate, which means businesses with younger workforces will feel a sharper rise in wage costs than in previous years. The accommodation offset increases to £10.66 per day, setting the limit on what can be charged for employer-provided accommodation without pushing pay below the minimum wage.
| Category | Rate from 1 April 2025 | Rate from 1 April 2026 |
|---|---|---|
| National Living Wage (21 and over) | £12.21 per hour | £12.71 per hour |
| 18 to 20 Year Old Rate | £10.00 per hour | £10.85 per hour |
| 16 to 17 Year Old Rate | £7.55 per hour | £8.00 per hour |
| Apprentice Rate | £7.55 per hour | £8.00 per hour |
| Accommodation Offset | £10.66 per day | £TBC (expected uplift) |
The Government has already announced the next set of increases for 1 April 2026. The National Living Wage will rise again to £12.71 per hour for workers aged 21 and over. The 18 to 20 rate will increase to £10.85 per hour, and the 16 to 17 and apprentice rates will both rise to £8.00 per hour. These further increases continue the trend of closing the differential between age bands and reflect the Government’s long-term approach to pushing minimum pay closer to a real-terms living standard.
Complying with Minimum Wage Rules
For employers, these changes involve more than updating a rate card. The legal duty is to pay each worker at least the correct statutory rate for every pay reference period. Mistakes often occur not because the headline rate is wrong but because systems fail to capture birthdays, apprenticeship milestones or changes in work patterns. Payroll software, HR data and time-recording processes all need to be aligned so that the correct rate automatically applies from the first pay reference period that starts on or after 1 April.
Compliance also depends on accurate record keeping. Employers are required to keep detailed pay and hours records for at least six years, and HMRC will test those records line by line during a review. Where working time is uncertain, such as travel between assignments, sleep-in shifts, waiting time or training, employers need to be clear about what counts for minimum wage purposes and document their approach. Errors in determining working time are one of the most common triggers of HMRC intervention.
| Obligation | Summary for Employers |
|---|---|
| Correct Rate Applied | Employers must pay the correct statutory rate based on age or apprentice status from the first pay reference period starting on or after 1 April. |
| Record Keeping | Six years of pay and hours records should be kept and must show how the minimum wage was met. |
| Working Time | Travel between assignments, waiting time, training and time awake during sleep-ins count as working hours for NMW purposes. |
| Deductions | Only the accommodation offset can count towards minimum wage. Other deductions may reduce pay and risk non-compliance. |
| Age & Apprenticeship Changes | Birthday and apprenticeship milestones must be monitored so increases apply automatically at the next pay reference period. |
The financial impact of the 2025 and 2026 increases should be built into budgets early. Rising minimum wage costs can compress pay differentials, leading to pressure from more experienced staff whose pay edges closer to the statutory floor. Employers who plan ahead and communicate clearly with their workforce are better placed to manage these pressures while maintaining compliance.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
