What is the National Living Wage from April 2026?

The National Living Wage (NLW), already one of the highest in the world, is set to rise again in April 2026 to £12.71 per hour, following the Low Pay Commission's recommendations.  The figure was confirmed in the Autumn Budget on 26 November 2025.

Chancellor Rachel Reeves says she has accepted the Commission's recommendations for the NLW to rise from 1 April 2026.

The Low Pay Commission had suggested that the NLW, payable to those aged 21 and over, should rise from £12.21 to at least £12.71 per hour (4.1% increase). The recommendation follows what the Commission refers to as stronger than expected wage growth.

In addition to the NLW rise, workers on the National Minimum Wage (NMW) aged between 18 and 20 will see an 8.5% rise from £10.00 to £10.85 an hour. And 16 to 17-year-olds, and those on apprenticeships, will see a 6% increase, bringing their minimum wage up from £7.55 to £8 an hour.

The current figures since 1 April 2025 and up to March 2026 are:

Analysis

The government says that over time it wants to align the National Minimum Wage and National Living Wage to create a single adult wage rate. So, over time those under the age of 21 will eventually receive the National Living Wage.

Currently, those under the age of 21 are only entitled to the National Minimum Wage (NMW), a reflection of their inexperience and need for training.

However, the government's favourite think tank, the Resolution Foundation, has warned that applying the NLW to those as young as 18 instead of the current age 21 would make the employment situation for young people go from “bad” to “worse”, adding that a growing number of young people are not even looking for work.

The April 2025 increase in employer National Insurance and the NLW have already made it more costly to employ young people in certain sectors.  Another rise in the NLW could leave young people "priced out of the labour market", the Resolution Foundation warns.

Certain sectors will be affected more than others by the rise, in particular the hospitality, food & drink and healthcare sectors.

On top of the rise, there will be new costs for employers in the Employment Rights Bill currently making its way through Parliament, which provides day one rights for employees such as for unfair dismissal.

Note: The National Living Wage set by the Low Pay Commission is different from the voluntary Real Living Wage set by the pressure group, Living Wage Foundation.

NLW and tax thresholds (fiscal drag)

It is also worth noting that someone aged 21 or older and working 35 hours a week on the current £12.21 NLW will have an annual salary of at least £22,222. With personal tax allowances frozen at £12,570, the effect of the new rates will increase the amount that is taxed on the worker (fiscal drag), so the full impact of the rise will be lost in part to tax.

Enforcement

Employers who do not pay at least the appropriate minimum wage face penalties as well as being named and shamed by HMRC.  See also HMRC's NMW guidance for employers.

In its latest enforcement and compliance report on the National Minimum Wage, HMRC points out that in 2024/25 it opened 5,200 new cases and closed 4,800. Of those closed, around 1,200 resulted in workers being paid arrears, with HMRC issuing around 750 penalties (totalling £4.2m) to employers. It also prosecuted three employers for underpaying the minimum wage.

What can employers do to plan for this wage rise?

While this uplift will be welcome news for employees, it poses another cost challenge for many businesses, particularly smaller employers.

With early planning, however, there are several steps employers can take to manage the impact effectively.

Review staffing and working patterns

Now is a good time to assess workforce needs and ensure staffing levels align with business demand. Reviewing shift patterns, redistributing responsibilities, or introducing more flexible working arrangements can all help to reduce costs.

Cross-training staff to cover a wider range of tasks can also make teams more adaptable and productive, particularly during busy periods.

Focus on productivity and efficiency

Improving efficiency is one of the most effective ways to offset rising wage costs. This may include investing in training to boost performance, adopting digital tools to automate routine tasks, or streamlining internal processes to eliminate waste and duplication.

Small changes, such as improving scheduling systems or updating stock control methods, can quickly add up to meaningful savings.

Review pricing and profitability

Employers should review their pricing strategies and profit margins to understand where adjustments may be needed. For some, small, strategic price increases may be appropriate, provided they are clearly communicated to customers.

At the same time, reviewing supplier contracts, subscriptions and energy costs can reveal areas where savings can be made without affecting service quality.

Make use of available support

Eligible small businesses can claim the Employment Allowance, reducing their National Insurance bill by up to £10,500 a year. Government-funded apprenticeship and training schemes can also help with recruitment and skills development at a lower cost.

It’s worth checking for any local grants or digital innovation funding that could help improve efficiency and productivity.

Plan ahead; contact us

The key to managing the NLW increase is preparation. Modelling the likely impact on payroll, updating budgets, and building up cash reserves in advance will put businesses in a stronger position.

We can help you assess the impact of the increase and plan practical steps to manage your employment costs effectively.

Speaking to us early on can help identify tax efficiencies and planning opportunities to ease the financial pressure. Contact a member of our Employer Solutions team.