What is the difference between the National Living Wage and the National Minimum Wage?

The National Living Wage is the higher statutory rate that applies to workers aged 21 and over, currently £12.21 per hour from April 2025. The National Minimum Wage covers younger workers below this age threshold, with lower rates applied by age band. Both are legal minimums set by the government not the same as the separately calculated Real Living Wage published by the Living Wage Foundation, which is a voluntary rate based on actual living costs and is higher than the statutory minimum.

What are the minimum wage rates by age in the UK?

UK minimum wage rates are tiered by age from April 2025. Workers aged 21 and over receive the National Living Wage of £12.21 per hour. Workers aged 18 to 20 receive £10.00 per hour. Workers under 18 who are no longer of compulsory school age receive £7.55 per hour. Apprentices aged under 19, or those in their first year of an apprenticeship regardless of age, receive £7.55 per hour. Workers over 19 and past their first apprenticeship year are paid at the rate for their age group.

Who is not entitled to the National Minimum Wage in the UK?

Not all individuals are entitled to the National Minimum Wage. Those exempt include self-employed individuals running their own businesses, company directors who do not have a worker or employment contract, volunteers working for charities or non-profit organisations, family members living in the family home who work in a family business, and workers below compulsory school leaving age typically under 16. Students on work placements that form part of a UK higher or further education course are also generally not entitled to the minimum wage during that placement period.

What are an employer's legal obligations regarding the National Minimum Wage?

Employers in the UK are legally required to pay all eligible workers at least the National Minimum Wage or National Living Wage for their age group. Employers must keep accurate payroll records demonstrating compliance for a minimum of six years. HMRC enforces minimum wage legislation and can investigate employers following a complaint or during a routine compliance check. Employers found to have underpaid workers face back payment of the full underpaid amount, a financial penalty of up to 200% of the underpayment, and potential public naming by the government.

How often does the UK minimum wage change and who decides the rate?

The UK minimum wage is reviewed and typically updated every April. The government sets the rates based on recommendations from the Low Pay Commission — an independent advisory body that examines labour market conditions, business impact, and the cost of living before making its annual recommendations. The government is not legally bound to follow the Commission’s advice but has historically adopted its recommendations. Employers should review their payroll at the start of each new tax year in April to ensure all workers are being paid the correct updated rate.

What happens if an employer pays below the minimum wage in the UK?

Paying below the minimum wage is illegal in the UK regardless of whether the worker agreed to the lower rate. HMRC can issue a notice of underpayment requiring the employer to repay all arrears to affected workers, calculated at the current minimum wage rate rather than the rate at the time of underpayment. Financial penalties of up to 200% of the total underpayment can also be imposed, capped at £20,000 per worker. Employers who repeatedly or seriously underpay workers may also be named publicly by the Department for Business and Trade as part of HMRC’s naming scheme.

UK Minimum Wage: Current Rates and What Employers Need to Know

Accurate minimum wage rates for 2025–26, including the upcoming April 2026 increases, apprentice rules, and what happens when employers get it wrong.

The National Living Wage and National Minimum Wage rates are updated every April. For 2025–26, the National Living Wage is £12.21 per hour for workers aged 21 and over. From 1 April 2026, this rises to £12.71. This guide covers the current rates, who qualifies, the rules for apprentices, and what to do if you believe your employer is paying below the legal minimum.

Current Rates: 2025–26 and the April 2026 Increase

Minimum wage rates apply from 1 April each year. The table below shows the current rates (April 2025 to March 2026) and the confirmed rates from April 2026.

Worker category	Apr 2024–Mar 2025	Apr 2025–Mar 2026	From Apr 2026	Notes
21 and over (NLW)	£11.44	£12.21	£12.71	National Living Wage
18 to 20	£8.60	£10.00	£10.85	NMW
16 to 17	£6.40	£7.55	£8.00	NMW
Apprentice*	£6.40	£7.55	£8.00	*See apprentice rules below

The age threshold for the National Living Wage (the top rate) has been progressively lowered in recent years. It applied to workers aged 25 and over until April 2021, then 23 and over until April 2024, and now applies to all workers aged 21 and over. The government has stated an intention to eventually extend it to all workers aged 18 and over, though no firm date has been set.

Who Is Entitled to Minimum Wage?

Almost all workers aged 16 and over are entitled to at least the National Minimum Wage. This includes:

Part-time workers
Workers on casual or zero-hours contracts
Agency workers
Workers on piece rates, commission, or tips (though tips paid through payroll count separately)
Home workers

The following are not entitled to the National Minimum Wage:

Self-employed individuals running their own business
Company directors (unless they have a worker’s contract in addition to their directorship)
Volunteers
Workers under school leaving age (usually 16)
Members of the armed forces

Employers cannot pay below the minimum wage even if the worker agrees to it in writing. Any agreement to work below the legal minimum is void.

The Apprentice Rate: What It Covers

The apprentice rate (£7.55 per hour from April 2025, rising to £8.00 from April 2026) applies in two specific situations:

Apprentices who are under 19 years old
Apprentices who are 19 or over but are in their first year of their apprenticeship

Once an apprentice turns 19 and has completed their first year, they become entitled to the standard minimum wage rate for their age group, not the apprentice rate.

For example, a 20-year-old who has just started their first year of an apprenticeship is entitled to £7.55 per hour. Once they complete their first year, they become entitled to the 18–20 rate of £10.00 per hour.

There is no legal requirement to pay apprentices at an enhanced rate for overtime. The minimum wage rates apply per hour worked, regardless of how many hours that is in a week. Any enhanced overtime rates would be a contractual matter between the employer and the apprentice, not a minimum wage requirement.

How Minimum Wage Is Calculated

The minimum wage applies to ‘pay reference periods’ usually a week or a month depending on how the worker is paid. It is not simply about the headline hourly rate.

What counts as pay for minimum wage purposes includes basic pay, incentive pay, and some allowances. It does not include:

Tips and gratuities paid directly to workers by customers
Overtime or shift premium (the extra above basic rate)
Pension contributions paid by the employer
Benefits in kind (such as free accommodation, though accommodation has its own special offset rules)

Salary sacrifice arrangements can affect minimum wage compliance. If a salary sacrifice scheme reduces a worker’s pay below the minimum wage threshold, the employer must top up their pay. This applies even if the worker has agreed to the sacrifice.

What Happens If an Employer Pays Below Minimum Wage?

Paying below the minimum wage is illegal. HMRC enforces minimum wage compliance and investigates complaints from workers. The consequences for employers include:

Being required to pay all underpaid wages in full to the affected workers
A civil penalty of up to 200% of the underpayment, capped at £20,000 per worker
Public naming on the government’s list of minimum wage non-compliant employers
In serious cases, criminal prosecution

HMRC can investigate minimum wage compliance up to six years back, so historic underpayments can still result in enforcement action.

How to Report a Minimum Wage Breach

If you believe your employer is paying you below the minimum wage, you have several options:

Contact HMRC’s minimum wage helpline: 0800 917 2368 (free, confidential)
Submit a complaint online via GOV.UK
Contact Acas (Advisory, Conciliation and Arbitration Service) for advice on your situation

HMRC treats minimum wage complaints confidentially and will not tell your employer who made the complaint. Workers are protected from dismissal or detriment for raising minimum wage issues.

Upcoming Changes: April 2026

From 1 April 2026, the National Living Wage rises from £12.21 to £12.71 per hour a 4.1% increase. The 18–20 rate rises from £10.00 to £10.85, and the 16–17 and apprentice rates rise from £7.55 to £8.00.

Employers should plan for these increases now. For businesses with a significant proportion of staff on or near minimum wage, the payroll impact can be substantial. Key actions to take before April 2026 include:

Reviewing current pay rates against the new minimums
Checking that salary sacrifice arrangements will not push any worker below the new minimum
Updating payroll software to apply the new rates from 1 April
Reviewing employment contracts where pay is described in terms of multiples of the minimum wage

UK Minimum Wage Rules, Employer Obligations, and Payroll Compliance

Understanding the UK minimum wage rules is essential for employers to ensure staff are paid correctly and payroll remains compliant with HMRC requirements. Minimum wage rates vary depending on age, apprenticeship status, and whether workers qualify for the National Living Wage. Failing to apply the correct rates can lead to penalties, reputational damage, and HMRC investigations.

Compliance involves more than simply checking hourly pay. Employers must consider deductions, unpaid working time, salary sacrifice arrangements, and payroll calculations to ensure workers are not effectively paid below the legal threshold. Accurate record-keeping and payroll management are therefore critical for avoiding underpayment risks and maintaining employment compliance.

At Cigma Accounting, we support businesses across Farringdon, helping them review payroll systems and ensure minimum wage compliance. We also assist employers in Clerkenwell and Holborn, ensuring payroll calculations and reporting processes remain accurate and aligned with HMRC requirements for 2026.