With new minimum wage rates taking effect from 1 April 2026, employers and employees alike need to understand what’s changing, and what it means for take-home pay and long-term pay policy.
Every April brings a wage floor review, but this year’s changes are particularly notable. The National Living Wage rises by 4.1% for workers aged 21 and over, with younger workers and apprentices also seeing meaningful increases. Here’s a full breakdown.
The new rates at a glance
A reminder that the following new minimum rates came into effect from 1 April 2026:
- Workers aged 21 and over (National Living Wage): £12.71 per hour — a 4.1% increase
- 18–20 year olds: £10.85 per hour — an 8.5% increase
- 16–17 year olds: £8.00 per hour — a 6% increase
- Apprentices: £8.00 per hour — a 6% increase
The government’s longer-term ambition
The long-term goal of the government is to bring everyone aged 18 and over onto the same level as those aged 21 and over. However, this goal would appear to be delayed at present. Lobbying by key industries on the effects of these increases seems to be providing a degree of common sense. Hopefully, if it does go ahead, it will be a phased increase rather than a cliff-edge change.
To give some context, someone aged 18 or over and working a 40-hour week will earn just under £26,500 per annum at the new rate, a meaningful income, but one that still leaves little room for financial manoeuvre for many households.
Beyond the NMW: the Real Living Wage
As well as the National Minimum Wage, there is something called the Real Living Wage. This applies to those aged 18 and over and has risen from £12.60 per hour to £13.45 per hour, with a higher rate for London. This new higher rate would take someone on a 40-hour week to just under £28,000 per annum salary.
The Real Living Wage is set independently by the Living Wage Foundation based on actual cost-of-living data, rather than government policy — making it a meaningful benchmark for employers who want to go beyond the legal minimum.
What this means for your business
If you employ staff on or near the minimum wage, April 2026 requires a payroll review. Failing to implement the correct rates exposes employers to back-pay liabilities, HMRC enforcement action, and potential reputational consequences. These are not simply headline numbers — they are legal obligations.
For businesses with a mix of age groups on their payroll, the differing rates across age bands add complexity that’s worth reviewing carefully with a payroll professional or accountant.
Need help reviewing your payroll?
PG Tax can help you ensure you’re compliant, accurate, and paying the right rates from April 2026 onwards. Get in touch with us today.