As we highlighted in an earlier post, the new rates for the National Living Wage and the National Minimum Wage that will apply from the 1st April 2026 were announced in advance of the 2025 Autumn Budget that was delivered by the Chancellor of the Exchequer, Rachel Reeves, on the 26th November 2025.
Key Points
- The National Living Wage will rise to £12.71 per hour from 1 April 2026 for workers aged 21 and over.
- National Minimum Wage increases apply across all age bands, including £10.85 for 18–20-year-olds and £8.00 for 16–17-year-olds and apprentices.
- The accommodation offset will increase to £11.10 per day from April 2026.
- The Real Living Wage and London Living Wage have risen to £13.45 and £14.80 per hour respectively, with implementation required by 1 May 2026 for accredited employers.
- The Low Pay Commission’s 2026 recommendation of £12.71 for the NLW has been accepted in full, ensuring the rate remains at or above two-thirds of median earnings.
National Living Wage & National Minimum Wage: New Rates
The new rates for the National Living Wage and the National Minimum Wage that will apply from the 1st April 2026 are as follows:
- For workers aged 21 and over (i.e. the National Living Wage): The rate will increase by £0.50 per hour (4.1%), rising from £12.21 per hour to £12.71 per hour.
- For workers aged 18–20 inclusive: The rate will increase by £0.85 per hour (8.5%), rising from £10.00 per hour to £10.85 per hour.
- For workers aged 16–17 inclusive: The rate will increase by £0.45 per hour (6.0%), rising from £7.55 per hour to £8.00 per hour.
- The apprentice rate: The rate will increase by £0.45 per hour (6.0%), rising from £7.55 per hour to £8.00 per hour.
- Accommodation offset: The daily rate will increase by £0.44 (4.1%), rising from £10.66 to £11.10.
These increases continue the trend of significant annual uplifts, particularly for younger workers, as the Government continues its long-term intention to phase out age banding over time.
Move Towards One Rate Across The Board
The current Government undertook in its new deal plan to make changes to the National Living Wage by making it what it calls a “genuine living wage“. Under these proposals, one rate would apply across the board, with the age bands removed.
Nevertheless, on the 30th July 2024, the then Secretary of State for Business and Trade, Jonathan Reynolds, announced that the move towards having one rate across the board for the National Living Wage would be phased in gradually over a period of time. That is, the National Minimum Wage age bands will remain for some time yet.
Accordingly, in line with the decision to gradually phase in the move towards having one rate across the board, the rates that apply to the age bands below the National Living Wage have again all been increased by a higher percentage compared to that of the National Living Wage. Hence, the gap between the National Living Wage and the amount paid to those aged 16-17 and apprentices narrowed last year from £5.04 per hour to £4.66 per hour. However, that has not happened this year, with the gap increasing from £4.66 per hour to £4.71 per hour.
Nevertheless, it remains the Government's stated intention to continue to close the gap until the point at which one rate ultimately applies across the board, although no timeframe has been set as to when that will happen.
Low Pay Commission — 2025 Remit & 2026 NLW Recommendation
In August 2025, the Government issued a new remit to the Low Pay Commission (LPC) ahead of its 2026 recommendations. The remit instructs the LPC to set the National Living Wage (NLW) at a level that does not fall below two-thirds of median UK hourly earnings for eligible workers. The LPC was also asked to take into account the cost of living, inflation forecasts between April 2026 and April 2027, and the expected impact on businesses, the labour market and competitiveness.
In its formal advice to the government, published on 25 November 2025, the LPC recommended increasing the National Living Wage (NLW) to £12.71 per hour, an increase of 50p (4.1%), on the basis that this level ensures the NLW remains at or above the two-thirds median earnings threshold and delivers a real-terms pay increase for low-paid workers. The government accepted the recommendation in full.
The LPC emphasised that its recommendations in relation to the National Living Wage and National Minimum Wage balance the imperative to protect low-paid workers against inflation and cost of living pressures with ongoing economic and business viability — recognising that previous years’ large increases have presented challenges, particularly for sectors with tight margins.
Real Living Wage & London Living Wage – Updated Rates
Separate to the Government’s statutory rates, the Living Wage Foundation announced the new Real Living Wage and London Living Wage rates back on the 22nd October 2025.
The Real Living Wage has increased by £0.85 per hour, rising from £12.60 to £13.45 per hour — an increase of 6.7%.
Over 16,000 employers are now accredited Real Living Wage employers (up 2,500 on the previous year), and they are expected to implement the new rate by no later than 1st May 2026.
The Real Living Wage is now £1.24 per hour higher than the current National Living Wage rate of £12.21 per hour.
The London Living Wage has increased by £0.95 per hour, rising from £13.85 to £14.80 per hour — an increase of 6.9%.
The London Living Wage now stands £2.59 per hour higher than the current National Living Wage.
Impact on Employers
The 2026 increases will have a particularly noticeable impact in sectors where younger workers and apprentices make up a significant proportion of the workforce, such as hospitality, retail, and leisure.
Employers should ensure:
- Payroll systems are updated ahead of April 2026
- Budgets for the 2026/27 financial year reflect the increased wage costs
- Supply chains and outsourced staffing arrangements remain compliant. If those workers are not being paid at least the correct statutory minimum wage or living wage, your organisation can still face legal, financial, and reputational risk — even if you are not the direct employer.
As always, failure to pay at least the statutory minimum wage constitutes an unlawful deduction from wages and may lead to HMRC naming-and-shaming enforcement action. There are also financial penalties of up to 200% of the arrears (capped at £20,000 per worker), plus the obligation to pay back pay to affected workers.
