Minimum Wage to rise on April 1 2026 – what it means for your pay

The National Living Wage will rise by 4.1% to £12.71 an hour for eligible workers aged 21 and over, which the Government said will increase gross annual earnings of a full-time worker on the rate by £900, benefiting around 2.4 million low-paid workers.

That will mean for the lowest paid workers on a 40-hour-week contract their pre-tax pay will hit £26,436.80 for the first time. A 37.5 hour week will see a salary of £24,784.50, while 35 hours will pay £23,132.20 a year.

The National Minimum Wage rate for 18 to 20-year-olds will increase by 8.5% to £10.85 an hour, narrowing the gap with the National Living Wage.

This will mean an annual earnings increase of £1,500 for a full-time worker, which the Government said marks further progress towards its goal of phasing out 18 to 20 wage bands and establishing a single adult rate.

The National Minimum Wage for 16 to 17-year-olds and those on apprenticeships will increase by 6% to £8 an hour.

Chancellor Rachel Reeves said she had accepted recommendations from the Low Pay Commission so that those on low incomes are “properly rewarded” for their work.

The Chancellor 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.

“These changes are going to benefit many young people across our country, getting their first job.”

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What does the minimum wage increase mean for small businesses?

Kate Underwood, Managing Director and HR Director at Southampton-based Kate Underwood HR and Training says: “It’s good news for workers who’ve been stuck on the lowest rung for too long. £12.71 an hour still won’t stretch far in today’s world, but it’s a start. And closing the gap for younger workers? About time.

“Will it be tough for small businesses? Yep. But so is constant staff turnover, sick days from burnout, and people juggling three jobs just to pay the bills.

“Can the UK afford it? Wrong question. Can we afford not to pay people properly? That’s the real one.”

Prem Raja, head of Trading Floor at Currencies 4 You agrees that it’s good news for workers.

“They need the extra cash and hopefully they spend it locally,” he says. “But we have to be real about the pressure this puts on business owners. It is getting incredibly hard to run a company right now. We’re already dealing with rising National Insurance and a weak Pound. Adding a big wage hike on top, especially that huge jump for younger staff, is squeezing us from every side.

“The brutal truth is that if employing people becomes too expensive, businesses just won’t hire. We’ll see jobs disappear because owners simply can’t afford the payroll, or prices will have to go up, which just fuels inflation further.

“It looks like they want to land some ‘good news’ before the Chancellor likely announces heavy tax burdens tomorrow. Without real help for small businesses, this could be the tipping point that forces many entrepreneurs to shut down.”

UK National Living Wage. Infographic from PA Graphics. (Image: PA Wire)

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But Riz Malik, director at Southend-on-Sea-based R3 Wealth also has concerns: “The last budget impacted employers view on employment by adding further costs.

“Raising the national living wage will only add to it if you factor in this and the associated employment costs. This is on the eve of the budget, which is likely to make it even more costly to do business in the UK.”

The increases will benefit a total of 2.7 million young and older workers, said the Government, adding that by seeking expert and independent advice, it was able to ensure that the right balance is struck between the needs of workers, the affordability for businesses and the opportunities for employment.