National Living Wage 2026: New Rates and What Every Employer Must Do

The National Living Wage (NLW) rose to £12.71 per hour on 1 April 2026 for workers aged 21 and over. That is a 4.1% increase, adding 50p per hour compared to the previous rate of £12.21.

If you have not updated your payroll yet, you need to act now. Paying below the legal minimum is a criminal offence, and HMRC enforcement is increasing.

This guide covers every 2026 minimum wage rate, how the payroll cut-off timing works, the most common ways employers accidentally underpay, and what enforcement looks like if HMRC comes calling.

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2026 National Minimum Wage Rates: The Full Table

All rates apply from 1 April 2026.

| Worker Category | Rate from April 2026 | Previous Rate (2025) | Increase | |---|---|---|---| | National Living Wage (aged 21+) | £12.71 | £12.21 | +4.1% | | 18 to 20 year old rate | £10.85 | £10.00 | +8.5% | | 16 to 17 year old rate | £8.00 | £7.55 | +6.0% | | Apprentice rate | £8.00 | £7.55 | +6.0% | | Accommodation offset (daily) | £11.10 | £10.66 | +4.1% |

The 18 to 20 rate has been raised faster (8.5%) than the NLW as the government works towards a single adult minimum wage. Employers with a mix of younger workers will see a proportionally larger payroll impact.

The Apprentice Rate: A Common Trap

The apprentice rate (£8.00) only applies to apprentices who are either:

• Under 19, or
• Aged 19 or over but in the first year of their apprenticeship

Once an apprentice completes their first year and turns 19, they must be paid the minimum wage for their actual age. An apprentice who turns 21 during the second year of their programme must jump to £12.71. Miss this and HMRC will find it.

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When Exactly Does the New Rate Apply? The Payroll Timing Rule

Most employers know the rate changes on 1 April. Fewer understand when it applies to their actual payroll.

The rule is: the new rate applies from the start of the first pay reference period that begins on or after 1 April 2026.

In practice, this means:

• If you run a weekly payroll with a period starting on Monday, and your first pay period starting on or after 1 April begins on 6 April, the new rate applies from 6 April, not 1 April.
• If your pay period started on 1 April, the new rate applies immediately.
• If your pay period started on 26 March and runs to 1 April, you pay the old rate for that period and the new rate from the next one.

For monthly payroll, if your pay period runs from the 1st of the month, the new rate applies from 1 April. If it runs from the 15th, the new rate starts on 15 April.

This is not a grace period. It is just how the legislation calculates compliance. You cannot wait until May to apply the April rate.

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What Counts as Pay: The Things That Trip Employers Up

Not everything you pay counts toward the minimum wage calculation. And some deductions reduce pay below the threshold even when the headline rate looks compliant.

1. Salary Sacrifice

If you run salary sacrifice arrangements (pension contributions, cycle to work, childcare vouchers), the salary used for minimum wage purposes is the pre-sacrifice amount minus the sacrifice. If that net figure falls below the minimum wage, you are in breach.

Example: A worker aged 21 on £12.80 per hour takes a £0.20/hour pension sacrifice. Net pay: £12.60. That is below £12.71. You must either adjust the salary upward or reduce the sacrifice to keep the worker above the threshold.

2. Uniform and Equipment Deductions

If you require workers to buy a uniform and deduct the cost from their wages, those deductions reduce pay for NMW purposes. The same applies to tools, protective equipment, or anything else the job requires.

3. Unpaid Working Time

All working time must be paid. Common examples where employers get caught:

• Pre-shift briefings or mandatory training counted as unpaid
• Travel time between appointments (common in domiciliary care, field sales, cleaning) that is not paid as working time
• Waiting time between assignments for zero hours workers

4. Sleep-In Shifts

This is particularly relevant in care. Workers doing overnight sleep-in shifts are only entitled to NMW for the time they are awake and required to work, following the Supreme Court ruling in Royal Mencap Society v Tomlinson-Blake [2021]. However, if your contracts are unclear or you are paying an overnight flat fee that works out below NMW once actual working time is calculated, HMRC may disagree.

5. Deductions for Employer Costs

Deductions that benefit the employer (till shortages, breakages, losses) reduce pay for NMW purposes. These are almost always unlawful when they take pay below the threshold.

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What Does a Full-Time Worker Cost at £12.71?

A worked example helps put the payroll impact in context.

A full-time worker (37.5 hours per week) on the National Living Wage from April 2026:

• Hourly rate: £12.71
• Weekly gross pay: £476.63
• Annual gross pay: £24,784

Add employer National Insurance contributions (15% above the secondary threshold of £5,000 per year):

• Annual employer NICs: approximately £2,968

Total annual employer cost: approximately £27,750 for one full-time minimum wage worker.

That is before pension auto-enrolment contributions (minimum 3% of qualifying earnings) and any other contractual benefits.

This is why payroll accuracy matters. An error of even 10p per hour across 10 workers is a £2,000 underpayment over a year and a £4,000 penalty.

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HMRC Enforcement: What Happens If You Get It Wrong

HMRC enforces the National Minimum Wage through targeted investigations and complaint-led inquiries. The Fair Work Agency, expected to be operational from 2027, will take over enforcement with stronger powers.

The Penalty

The penalty for underpayment is 200% of the total amount underpaid, subject to:

• A minimum of £100
• A maximum of £20,000 per worker

The penalty is halved (to 100%) if you pay the arrears within 14 days.

On top of the financial penalty, HMRC will name and shame employers who underpay. The GOV.UK naming list is published regularly and includes well-known businesses alongside small employers. Reputational damage is real and hard to repair.

How HMRC Finds Underpayments

HMRC receives referrals from workers, trade unions, ACAS, and local authorities. They also run targeted sector campaigns. Sectors currently under close scrutiny include hospitality, care, retail, and cleaning.

HMRC audits go back up to six years. If your payroll records are poor, HMRC will estimate underpayment based on worker statements, which tends to produce higher figures than accurate records would show.

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The Real Living Wage: A Note for Accredited Employers

The Real Living Wage is a separate, voluntary rate set by the Living Wage Foundation. It is higher than the statutory NLW and reflects the actual cost of living.

The current rates are:

• UK Real Living Wage: £12.60 per hour (as of November 2024)
• London Living Wage: £13.85 per hour

If your business is accredited by the Living Wage Foundation, you must implement new Real Living Wage rates by 1 May following each annual announcement (typically in November). Check whether your May deadline applies.

Note: the Real Living Wage UK rate is lower than the new statutory NLW of £12.71. This is a temporary anomaly. The Real Living Wage Foundation is expected to revise rates in November 2026.

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Employer Checklist: April 2026 Minimum Wage

Run through this before your next payroll run.

• [ ] Update payroll software with new rates for all age bands
• [ ] Identify any workers aged 21+ on rates below £12.71 and adjust
• [ ] Identify any workers aged 18 to 20 on rates below £10.85 and adjust
• [ ] Check all apprentices: have any reached year two and turned 19? Adjust to their age-band rate
• [ ] Review any salary sacrifice arrangements: does net pay stay above NMW for all workers?
• [ ] Check that uniform or equipment deductions do not take any worker below the threshold
• [ ] Review how you calculate and pay travel time for mobile workers
• [ ] Confirm your pay reference period start date and apply the new rate from the correct period
• [ ] If you are a Living Wage Foundation accredited employer, confirm your May 1 deadline

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FAQ: National Living Wage 2026

What is the National Living Wage from April 2026?

The National Living Wage from 1 April 2026 is £12.71 per hour for workers aged 21 and over. This is a 4.1% increase on the previous rate of £12.21. The 18 to 20 rate is £10.85, the under-18 rate is £8.00, and the apprentice rate is £8.00.

Does the new rate apply immediately on 1 April?

Not necessarily. The new rate applies from the start of the first pay reference period that begins on or after 1 April 2026. If your weekly pay period starts on 6 April, the new rate applies from that date. This is a legal technicality, not a grace period.

What happens if I pay below the minimum wage?

HMRC can issue a penalty of 200% of the total underpayment, up to a maximum of £20,000 per underpaid worker. You must also repay the arrears. Employers who underpay are publicly named on the GOV.UK enforcement list.

Can salary sacrifice take a worker below the National Living Wage?

No. Salary sacrifice reduces the earnings used to assess minimum wage compliance. If the post-sacrifice rate falls below £12.71 per hour for a worker aged 21 or over, the employer is in breach. You must either increase base pay or reduce the sacrifice.

Do I have to pay the National Living Wage to apprentices?

It depends on the apprentice's age and how far into their apprenticeship they are. The apprentice rate (£8.00) applies to apprentices under 19, or those aged 19 and over in their first year. Once they complete year one and are aged 19 or over, they must receive the minimum wage for their age group.

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

The National Living Wage is the statutory minimum set by the government. It is a legal floor and applies to all employers. The Real Living Wage is a voluntary rate set by the Living Wage Foundation based on actual living costs. It is higher in most years. Employers who are accredited by the Living Wage Foundation must pay the Real Living Wage to their staff, including contractors on site.

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Make Sure Your Contracts Reflect the New Rates

Pay is only one part of compliance. If your employment contracts specify a pay rate that is now below the legal minimum, you are in a difficult position even if you pay the correct rate on payroll. Contracts that reference fixed rates rather than "the applicable National Living Wage" may need updating.

Get your contracts checked against the new rules. EmployerKit Audit from £49.

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Last updated: April 2026. This content is for general information only and does not constitute legal advice. Verify current rates and obligations at gov.uk/national-minimum-wage-rates and acas.org.uk.