Changes to minimum wages in 2025
Posted on 25th November 2024
The government sets the minimum hourly pay for employees based on the average number of hours they work. This is called the National Minimum Wage (NMW) or the National Living Wage (NLW) for employees aged 21 or over. The rate increases each year on 1 April.
In 2025 annual gross pay for NLW employees working 37.5 hours per week will increase by £1,505.54 or £125.46 per month.
NLW and NMW changes for 2025
The new rates are based on the recommendations of the Low Pay Commission, which were accepted in the Autumn Budget last month. The National Living Wage will increase by 6.7% or 77p, so the new hourly rate will be £12.21.
There are also significant increases in the NMW rates for younger employees and apprentices. For 18 to 20-year-olds the NMW increases by 16.3% or £1.40 per hour to £10.00. For 16 to 17-year-olds and apprentices the increase is 18% or £1.15 per hour to £7.55.
Low Pay Commission recommendations will now focus on keeping the NLW above two-thirds of median hourly earnings, allowing for inflation. It can recommend increases above this level if economic conditions allow. The government says it wants to remove the 18 to 20-year-old rate in future so the NLW will apply to everyone over 18.
At a glance - National Minimum Wave/National Living Wage rates for 2025/26
|
|
Rate from April 2024 |
Rate from April 2025 |
Increase |
% |
|
National Living Wage for people aged 21 and over |
£11.44 |
£12.21 |
£0.77 |
6.7% |
|
18 to 20-year-olds |
£8.60 |
£10.00 |
£1.40 |
16.3% |
|
16 to 17-year-olds |
£6.40 |
£7.55 |
£1.15 |
18.0% |
|
Apprentice rate |
£6.40 |
£7.55 |
£1.15 |
18.0% |
|
Accommodation offset |
£9.99 |
£10.66 |
£0.67 |
6.7% |
Who receives the NLW and NMW
These rates apply to people who are:
part-time
casual labourers, hired for one day at a time, for example
agency workers
workers and homeworkers paid by the number of items they make
apprentices
trainees and workers on probation
disabled workers
agricultural workers
foreign workers
seafarers
offshore workers
non-family members living in their employer’s home who share in work and leisure activities, who are treated as one of the family and are not charged for meals or accommodation, such as au pairs.
Apprentices
The apprentice rate applies for people who are either:
aged under 19
aged 19 or over and in the first year of an apprenticeship.
Apprentices over 19 who have completed the first year of their apprenticeship are entitled to the correct minimum wage for their age.
Who doesn’t receive the NLW or NMW
Employment status and other categories of work mean that some people don’t qualify for the NLW or NMW. This affects:
self-employed people running their own business
company directors
people who are volunteers or voluntary workers for charities, voluntary organisations or statutory bodies who receive limited benefits such as travel expenses
people on a government employment programme
members of the armed forces
family members of an employer who live in the employer’s home
workers younger than school leaving age (usually 16)
students in higher and further education, in work experience or a work placement for up to one year
people shadowing others at work
people on government pre-apprenticeship schemes
people following certain EU programmes
people working on a Jobcentre Plus Work trial for up to six weeks
share fishermen
prisoners
people living and working in a religious community.
You can use the government’s minimum wage calculator to check entitlements.
Please get in touch if you would like us to provide projections of how the increase in NLW and NMW will affect your business.
Tagged as: national living wage, national minimum wage
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