The National Living Wage (NLW) will rise by 4.1% to £12.71 per hour for eligible workers aged 21 and over from April 1 2026, the Chancellor has said.
This will increase the gross annual earnings of a full-time worker on the NLW by £900, and will impact around 2.4 million workers.
The National Minimum Wage (NMW) rate for 18–20-year-olds will also increase by 8.5% to £10.85 per hour, narrowing the gap with the NLW. This will mean an annual earnings increase of £1,500 for a full-time worker.
The UK Government said it “marks further progress towards the Government’s goal of phasing out 18-20 wage bands and establishing a single adult rate”.
The NMW for 16–17-year-olds and those on apprenticeships will increase by 6% to £8 per hour.
In a video message, the Chancellor of the Exchequer, Rachel Reeves said:
“I know that the cost of living is still the number one issue for working people and that the economy isn't working well enough for those on the lowest incomes.
“Too many people are still struggling to make ends meet. And that has to change.
“That's why today I'm announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work.”
Paul Nowak, General Secretary of the TUC, said:
“The Government is delivering on its promise to make work pay.
“With living costs stubbornly high an above-inflation pay rise will make a real difference to the lowest-paid. Putting more money in people’s pockets is good for workers and good for the economy as it goes straight back into our high streets and local businesses.
“And sticking with plans to scrap youth rates is absolutely the right call. Young workers have bills like everyone else and deserve a fair day’s pay for a fair day’s work. It's right they see a larger rise as youth rates are phased out.”
But UKHospitality warned of the impact on businesses in the sector, saying: “The additional cost once again increases the sector’s tax burden”.
The trade body also warned that the level of increases to youth rates will put further pressure on youth employment, just days after the ONS revealed there were almost a million young people not in employment, education or training.
Kate Nicholls, Chair of UKHospitality, said:
“The higher-than-expected increase to the rates for under-21s are also worrying for hospitality businesses, who had hoped the Government would take a more pragmatic approach to achieving its goal of equalising all wage rates.
“When there are almost a million young people not in employment, education or training, this will put further pressure on already fragile youth employment rates. Given the Government’s ambition to help young people back into work, this level of increase is concerning.
“Hospitality is a sector that offers opportunities for all, regardless of experience or background, and is uniquely placed to help tackle youth unemployment. This should be embraced and supported, rather than discouraged.”
