What Are the National Minimum Wage and Living Wage Worth?

On 1 April 2025, millions of low-paid workers in the UK saw a significant increase in their wages as the new rates for the National Living Wage and National Minimum Wage took effect. This adjustment, which affected around three and a half million workers, is part of the government's annual review based on recommendations from the Low Pay Commission. The National Living Wage rose to £12.21 per hour, while the National Minimum Wage for younger employees saw substantial increases, improving financial conditions for many households across the country.

Last updated: 01 April 2025 (BST)

What’s happening now

The UK's labour market is experiencing a notable shift as the new wage increases come into effect. The National Living Wage now applies to workers aged 21 and over, expanding its reach to a younger demographic that previously only included those aged 23 and above. This change is expected to enhance the financial stability of many low-paid workers and their families, as the increase of £1.77 per hour translates to an annual boost of approximately £1,400 for full-time employees. Furthermore, the National Minimum Wage for 18-20-year-olds has surged by 16.3%, providing additional support to younger workers entering the job market.

Key takeaways

The National Living Wage increased to £12.21 an hour, benefiting millions of low-paid workers.
Wages for 18-20-year-olds rose by 16.3%, reaching £10 an hour.
The Real Living Wage, overseen by the Living Wage Foundation, has also seen an increase, with London workers earning at least £14.80 an hour.
Employers who fail to comply with the wage laws can face significant penalties from HMRC.
Apprentices and younger workers have specific wage rates based on their age and apprenticeship stage.

Timeline: how we got here

Understanding the evolution of wage rates in the UK involves looking back at key events and decisions:

April 2024: The National Living Wage was extended to workers aged 21 and over.
1 April 2025: The National Living Wage increased to £12.21 per hour, a rise of 6.7%.
1 April 2025: The National Minimum Wage for 18-20-year-olds rose to £10, marking a 16.3% increase.
1 April 2025: The National Minimum Wage for 16-17-year-olds increased to £7.55, an 18% rise.

What’s new vs what’s known

New today/this week

The latest updates involve substantial increases in the National Living Wage and National Minimum Wage, particularly for younger workers. The 18-20-year-old rate has seen a remarkable rise to £10 an hour, marking a significant milestone in wage reform aimed at improving the earnings of younger employees.

What was already established

Previously, the National Living Wage was applicable to individuals aged 23 and older. The shift to include those aged 21 and over reflects a growing recognition of the need to support younger workers. Additionally, the Real Living Wage continues to be a voluntary rate adopted by many employers, providing an alternative to statutory wage levels.

Impact for the UK

Consumers and households

The wage increases are likely to have a positive ripple effect for consumers and households. Workers earning the National Living Wage can expect an annual income boost that can help alleviate financial pressures, particularly in the wake of rising living costs. For instance, a full-time worker's income could increase by £1,400, allowing for greater disposable income or savings.

Businesses and jobs

For businesses, the wage increases may necessitate adjustments in budgeting and payroll management. Employers must ensure compliance with the new wage laws, which could affect hiring practices and operational costs. Companies that fail to comply risk facing penalties from HMRC, as seen in the October 2025 report where nearly 500 employers were fined over £10 million for non-compliance.

Policy and regulation

The ongoing adjustments to the National Living Wage and National Minimum Wage highlight the government's commitment to addressing wage disparities. Upcoming consultations and reviews by the Low Pay Commission will likely continue to influence wage policy, ensuring that workers are compensated fairly in a changing economic landscape.

Numbers that matter

The National Living Wage increased from £11.44 to £12.21, a rise of £1.77 per hour.
The 18-20-year-old National Minimum Wage rate rose from £8.60 to £10, an increase of £1.40.
For 16-17-year-olds, the rate increased from £6.40 to £7.55, an 18% rise.
Approximately 3.5 million workers are affected by the new National Living Wage and Minimum Wage rates.
Employers can be fined up to double the total amount owed for failing to pay the minimum wage.

Definitions and jargon buster

National Living Wage: The minimum hourly wage that must be paid to employees aged 21 and over, set by the government.
National Minimum Wage: The minimum wage for younger workers, including those aged 16-20 and apprentices.
Real Living Wage: A voluntary wage rate aimed at ensuring a decent standard of living, overseen by the Living Wage Foundation.
Low Pay Commission: An independent body that advises the government on minimum wage rates.

How to think about the next steps

Near term (0–4 weeks)

As the new wage rates take effect, employers must review their payroll systems to ensure compliance. Workers should check their payslips to ensure they are receiving the correct amount according to the new rates.

Medium term (1–6 months)

In the coming months, businesses may need to adjust budgets and pricing strategies to accommodate the new wage costs. Additionally, employees may begin to notice changes in their financial situations, potentially leading to increased consumer spending.

Signals to watch

Monitoring compliance reports from HMRC regarding wage enforcement.
Observing the response of businesses to the wage increases, particularly in sectors that typically employ low-paid workers.
Tracking the economic impact of increased disposable income on consumer spending patterns.

Practical guidance

Do

Ensure your employer is complying with the new wage rates.
Keep an eye on your payslip for any discrepancies in pay.
Report any concerns to HMRC or seek advice from workplace experts.

Don’t

Ignore potential underpayments; act promptly to resolve issues.
Assume that all employers are compliant; verify your pay.
Overlook the options available for reporting wage violations.

Checklist

Check if you are eligible for the National Living Wage or National Minimum Wage.
Verify the new rates applicable to your age group or employment status.
Monitor your payslip for accuracy with the new wage rates.
Research your rights regarding wage complaints and the reporting process.
Engage with workplace support services if needed.

Risks, caveats, and uncertainties

While the wage increases represent a positive step for many workers, uncertainties remain regarding the long-term impact on employment levels and business operations. Some employers may struggle to adapt to the higher wage costs, which could lead to a reduction in hiring or even layoffs in certain sectors. Additionally, the voluntary nature of the Real Living Wage means that not all workers will benefit from these increases, highlighting ongoing disparities in pay across different industries.

Bottom line

The recent increases in the National Living Wage and National Minimum Wage are significant developments for low-paid workers in the UK. These changes are expected to improve the financial circumstances of millions, providing them with more disposable income amidst rising living costs. As the labour market adjusts, both employers and employees will need to navigate the implications of these changes carefully.

FAQs

What is the National Living Wage?

The National Living Wage is the minimum hourly wage set by the government for employees aged 21 and over. It aims to ensure that workers earn a fair wage for their labour.

How often does the National Minimum Wage change?

The National Minimum Wage is reviewed and updated annually by the government based on recommendations from the Low Pay Commission.

What should I do if I think my employer is not paying me the correct wage?

If you believe you are not being paid the correct National Minimum Wage or National Living Wage, you can report your employer to HMRC or seek advice from workplace experts at Acas.