UK Minimum Wage Rates 2026: Complete Guide for Employers

Paying employees at least the National Minimum Wage is one of the most fundamental legal obligations for UK employers. Yet HMRC continues to name and shame hundreds of businesses each year for underpayment — often due to misunderstandings rather than deliberate avoidance.

This guide covers the current rates, upcoming changes, common compliance traps, and exactly what you need to do to stay on the right side of the law.

Current rates: April 2025 to March 2026

The National Living Wage (NLW) and National Minimum Wage (NMW) rates are reviewed annually by the Low Pay Commission and typically change each April. The rates effective from 1 April 2025 are:

Upcoming rates: April 2026

The Low Pay Commission recommends new rates each autumn, with changes taking effect the following April. For the 2026/27 rates, employers should monitor the government announcement expected in late 2025 or early 2026 and plan payroll adjustments accordingly.

Regardless of the exact figures, the trend is clear: minimum wage rates have been rising significantly faster than general inflation, and the gap between the youth rates and the NLW is narrowing. Budget for continued above-inflation increases.

Who qualifies for the National Living Wage

The NLW applies to all workers aged 21 and over. This includes full-time employees, part-time employees, casual and zero-hours contract workers, agency workers, and most piece workers. The key test is whether someone is a "worker" for employment law purposes — a broader definition than "employee."

Workers not entitled to the NMW include self-employed contractors (genuinely self-employed, not disguised employment), company directors who are not also workers, volunteers and voluntary workers for charities, members of the armed forces, share fishermen, and prisoners.

The apprentice rate: who qualifies

The apprentice rate applies only to apprentices who are either under 19 years old, or aged 19 or over and in the first year of their apprenticeship. Once an apprentice turns 19 and has completed the first year of their apprenticeship, they must be paid at least the NMW rate for their age group.

This is a common area of confusion. An apprentice aged 22 who has been on the programme for 14 months must be paid the full NLW of £12.21 per hour, not the apprentice rate.

Common compliance traps

HMRC's naming and shaming rounds consistently reveal the same categories of underpayment. Most employers who breach the rules do so unintentionally.

Trap 1: Uniform and equipment deductions

If you require employees to purchase or maintain a uniform, and the cost effectively reduces their pay below the minimum wage, you are non-compliant. This includes mandatory safety boots, branded clothing, or any other equipment the worker must buy to do the job. The deduction is assessed in the pay reference period it falls in.

Trap 2: Unpaid working time

Time spent opening up the premises, attending mandatory training, travelling between assignments during working hours, and security checks at the end of shifts all count as working time. If this time is unpaid and it brings the average hourly rate below minimum wage, you are in breach.

Trap 3: Salary that looks compliant but is not

An employee on a salary of £24,000 working a contracted 37.5 hours per week earns £12.31 per hour — above the NLW. But if they regularly work 45 hours per week with unpaid overtime, their effective rate drops to £10.26, well below the minimum. Our guide on how to calculate overtime pay covers this in detail.

Trap 4: Accommodation offset

If you provide accommodation to workers, you can count a limited amount towards their minimum wage pay. The accommodation offset for 2025/26 is £10.66 per day or £74.62 per week. Charging more than the offset or deducting accommodation costs that exceed the offset will create an underpayment.

Trap 5: Age band transitions

When an employee has a birthday that moves them into a higher rate band, the new rate applies from the start of the first pay reference period that begins on or after their birthday. Missing this change — even by one pay run — creates a breach.

How HMRC enforces minimum wage

HMRC's National Minimum Wage enforcement team conducts both targeted and random investigations. They can also investigate in response to worker complaints — and workers can complain anonymously through the ACAS helpline.

During an investigation, HMRC will request payroll records, time records, contracts, and any other documentation needed to verify compliance. They have the power to issue notices of underpayment covering up to six years of arrears.

Penalties for underpayment

The penalties are substantial and have increased in recent years:

• Arrears: You must pay back every penny of underpayment to every affected worker, covering up to six years
• Financial penalty: 200% of the total arrears, up to a maximum of £20,000 per worker
• Naming and shaming: HMRC publishes the names of non-compliant employers quarterly. The reputational damage can be significant for customer-facing businesses
• Criminal prosecution: In the most serious cases — particularly deliberate and repeated non-payment — directors can face criminal charges, unlimited fines, and imprisonment

Record-keeping requirements

Employers must keep sufficient records to demonstrate minimum wage compliance for each worker. Records must be kept for at least three years (though HMRC can investigate up to six years back, so keeping records for six years is advisable).

At a minimum, your records should include the hours worked in each pay reference period, the total pay in each pay reference period, any deductions made, and the worker's date of birth (to determine the applicable rate).

Pay reference periods

Minimum wage compliance is assessed per pay reference period — normally the interval between pay dates. For monthly-paid employees, the reference period is one month. For weekly-paid employees, it is one week.

This matters because an employee might work long hours one week and short hours the next. You cannot average across multiple pay reference periods unless the pay reference period itself spans that time.

Salary sacrifice and minimum wage

If employees participate in salary sacrifice arrangements — such as childcare vouchers, cycle-to-work schemes, or pension contributions — the post-sacrifice pay must still meet the National Minimum Wage. If it does not, the salary sacrifice arrangement is non-compliant and the shortfall must be made up.

Check any salary sacrifice schemes you offer against the current NMW and NLW rates, particularly for your lowest-paid employees. Our Payroll Tax Calculator can help you model the impact.

Frequently asked questions

Next steps

Key takeaways

Minimum wage compliance is not just about setting the right hourly rate — it is about ensuring that deductions, unpaid time, uniform costs, and salary sacrifice arrangements do not drag the effective rate below the legal minimum. Review your payroll against the current rates, check for the common traps outlined above, and make sure your record-keeping can withstand an HMRC investigation.

Run your figures through our Payroll Tax Calculator to verify compliance, and review your employment contracts to ensure pay terms are clear and accurate. Five minutes of checking today beats six figures of penalties tomorrow.