Millions of the lowest-paid workers in the UK are set for a pay boost after Chancellor Rachel Reeves confirmed a rise in the National Living Wage ahead of the Budget. From 1st April 2026, the National Living Wage for those aged 21 and over will rise by 4.1% to £12.71 an hour. The increase is expected to boost the annual income of full-time living wage workers by over £900.
Younger workers will experience an even bigger increase as the government moves towards a single adult rate, with 18-20 year-olds receiving an 8.5% boost to £10.85 an hour.
What are the new minimum wage rates?
The government has accepted the recommendations of the Low Pay Commission (LPC) in full. For context, the Low Pay Commission is an independent public body that advises the government on the rates of the National Minimum Wage and National Living Wage. It is made up of employers, trade unionists, and labour market experts.
Its role is to conduct extensive research and consultation with businesses and workers to find a balance, setting a rate that properly rewards staff without damaging the economy or causing job losses. The government sets the LPC a "remit" each year, and for this review, specifically asked them to factor in the cost of living and to narrow the gap between younger and older workers.
The new rates effective from April 2026 are:
| Category | Current Hourly Rate (2025/26) | New Hourly Rate (April 2026) | Increase (£) | Increase (%) |
| National Living Wage (21+) | £12.21 | £12.71 | £0.50 | 4.10% |
| 18-20 Year Old Rate | £10.00 | £10.85 | £0.85 | 8.50% |
| 16-17 Year Old Rate | £7.55 | £8.00 | £0.45 | 6.00% |
| Apprentice Rate | £7.55 | £8.00 | £0.45 | 6.00% |
Why is the rate rising?
The rise is designed to ensure the lowest earners are protected against rising prices, and the increase broadly tracks the 4.7% average earnings growth seen across the economy earlier this year.
Chancellor Rachel Reeves stated that the "cost of living is still the number one issue for working people," and said that the rise ensures those on low incomes are "properly rewarded."
The larger increase for 18-20 year-olds (8.5%) is part of a specific government strategy to narrow the gap between younger workers and the full adult rate, with the ambition of eventually abolishing the age bands entirely. However, the push to equalise pay for younger workers has raised concerns. The Resolution Foundation has warned that scrapping lower youth rates could inadvertently harm job prospects for young adults. With youth unemployment rising to 14.5% and the number of young people not in education, employment or training (NEET) nearing one million, there are fears that higher wage costs may discourage businesses from taking on younger, less experienced staff.
What is the effect of the wage increase?
The rise in the National Living Wage will be felt across the economy, providing a welcome boost to household incomes while also increasing costs for employers.
The impact on your finances
For a full-time worker (37.5 hours a week) aged 21 or over, the rise to £12.71 equates to a gross annual salary of approximately £24,784, up from £23,809. It is a rise of roughly £80 per month, which, after tax and national insurance are deducted, could mean roughly £58 extra in take-home pay. These figures are estimates based on a standard tax code, and your actual take-home pay will depend on your individual circumstances, such as your specific tax code, pension contributions, and any student loan repayments. Always check your payslip to confirm exactly how much you are being paid.
The impact on businesses
While the news is positive for employees, business groups have warned that the rise, coupled with other costs, could put additional strain on firms that are already struggling. Sectors including hospitality and retail, which employ large numbers of minimum-wage workers, have expressed concern that the hike could force them to raise prices for consumers or pause hiring. This mirrors recent concerns about the sustainability of rising costs amid sticky inflation.
How to check that you are getting the increase
If you are on the National Living Wage, mark 1st April 2026 in your calendar. Check your payslip in late April or May to ensure your employer has applied the new rate correctly. If they haven't, you should speak to your manager or contact ACAS for free, impartial advice.
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