The government has published draft regulations setting the new NMW rates that will apply from 1 April 2026. These reflect the recommendations made by the Low Pay Commission (LPC) in November 2025.
Facts
With effect from 1 April 2026, the applicable NMW rates will be:
- National Living Wage (NLW) rate for workers aged 21 and over: £12.71 per hour (a 4.1% increase from the current NLW rate)
- For workers aged 18 - 20: £10.85 per hour (an 8.5% increase)
- For workers aged 16 - 17: £8.00 per hour (a 6% increase)
- Apprentice rate: £8.00 per hour (also a 6% increase. Note that this rate applies to apprentices aged under 19, or those aged 19 or over who are in the first year of their apprenticeship)
On 2 February 2026, the LPC published the research, evidence and analysis it used to inform its recommendations. This also underpins the LPC's proposals on how best to move towards the government's target of removing the NMW age bands so as to apply a single NLW rate to all workers aged 18 or over. The LPC considers that the labour market treats 20 year olds differently from 18 and 19 year olds, with around 70% of 20 year olds already paid at or above the NLW rate. In view of this, the LPC's recommendation is to reduce the age for NLW eligibility to 20 in 2027. Depending on economic conditions and government policy, the age for NLW eligibility could then be lowered to 18 in either 2028 or 2029.
What does this mean for employers?
Employers who pay their staff at or close to the NLW/NMW will face significant additional costs when these annual increases take effect in April. The need to maintain pay differentials between the lowest paid and more senior employees will compound this.
Employers will also need to check that any existing salary sacrifice arrangements remain compliant once the new NLW/NMW rates take effect, as deductions made via salary sacrifice schemes are not permitted to reduce employees' pay below the NLW/NMW.
