The government sets the minimum hourly pay for employees based on the average number of hours they work. The National Minimum Wage (NMW) or National Living Wage (NLW) for employees over 21 increases in April each year.
In 2026 annual gross pay for NLW employees working 37.5 hours per week will increase by £977 per year or £81 per month.
NLW and NMW changes for 2026
The new rates are based on the recommendations of the Low Pay Commission.
First introduced in 1999, the real value of all minimum wage rates decreased due to inflation. The target is now for the NMW to stay at or above 66% of median hourly earnings. This must take into account inflation and the cost of living. Phasing out the 18 to 20 year-old rate will mean the NLW eventually applies to everyone over 18.
National Minimum Wage/National Living Wage rates for 2026
|
|
Rate from April 2025 |
Rate from April 2026 |
Increase |
% change |
|
National Living Wage for people aged 21 and over |
£12.21 |
£12.71 |
£0.50 |
4.1% |
|
18 to 20-year-olds |
£10.00 |
£10.85 |
£0.85 |
8.5% |
|
16 to 17-year-olds and apprentice rate |
£7.55 |
£8.00 |
£0.45 |
5.9% |
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, treated as one of the family and not charged for meals or accommodation, such as au pairs.
You can use the government’s minimum wage calculator to check entitlements.
Are you paying the NMW or NLW correctly?
Are you sure you’re paying employees the NMW or NLW correctly? Mistakes can lead to significant penalties.
The calculations involve more than the hourly rates you pay, so it isn’t as simple as you may think. It’s possible to underpay employees even if they receive minimum wages or slightly more.
Carry out an NMW/NLW review
HMRC recommends all employers should review NMW/NLW pay for their employees. You can find information to help you on the GOV.UK website.
If you find mistakes, you must put them right straightaway and pay anything you owe to current and former employees. You can let HMRC know about any changes by making a voluntary declaration. If you do this, you probably won’t have to pay a penalty.
HMRC can also carry out checks. If you have underpaid employees, you must repay them and possibly pay penalties too. The Department for Business and Trade (DBT) might also name your business publicly.
Your NMW/NLW checklist
Rate of pay. Check your payroll and review who should receive the NMW or NLW.
Deductions. Deductions for expenses connected with an employee’s job reduce their pay for NMW purposes. For example, deductions for uniforms, tools or equipment could mean they’re underpaid. It doesn't matter whether they buy things from you or a third party. There are also rules about charges for accommodation called the ‘accommodation offset’. This is currently £10.66 per day or £74.62 per week (rising to £11.10 per day in 2026). If you charge more, this will reduce your employee’s NMW and could lead to underpayment. If accommodation is free, you can add the offset rate to their pay.
Time worked. For NMW purposes you must include time when your employees are:
• required at work, including time spent on tasks before or after the beginning or end of their shift
• travelling for business or training
• on standby at or near their place of work.
If you would like some help to review your employees’ pay for NMW/NLW purposes, please get in touch.
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