The 2025/2026 tax year has started and with it an increase to the national minimum wage (NMW).
This is positive news for all individuals in this pay bracket and could affect around three and half million lower paid workers under PAYE.
Employers should use the new national minimum wages rates from April 2025 which could improve pay by up to £2,500 in the 25/26 tax year.
It is a legal obligation for employers to comply with the national minimum wage regulations, ensuring that all eligible employees receive the correct pay.
This responsibility includes updating payroll systems to reflect new rates, providing accurate wage slips, and maintaining transparent communication with staff about wage changes.
Employees under PAYE will have received pay from April so now is a good time to check you have been paid the correct hourly rate.
Understanding your entitlement under the national minimum wage is crucial. It ensures that you are being paid fairly and can take appropriate action if you are not receiving the correct amount.
What is the National Minimum Wage?
The national minimum wage is the minimum hourly pay that employers are legally obligated to provide their employees.
It is designed to ensure workers receive fair compensation for their labour, thereby reducing poverty and inequality.
Established by the government, this baseline wage varies depending on factors such as age, work status, and region.
In the UK, the minimum wage is categorised into different bands according to age groups and employment status.
These categories include the national living wage for those aged 21 and over, and various tiers for younger workers and apprentices.
This structure ensures fairness and acknowledges the varying levels of experience and responsibilities among employees.
What are the National Minimum Wage rates for the 25/26 tax year?
From April 1, 2025 the national minimum wage and living wage rates are:
- National living wage for ages 21 and over: £12.21 per hour.
- National minimum wage for ages 18 to 20: £10.00 per hour.
- Aged under 18: £7.55 per hour.
- Apprentice: £7.55 per hour.
- The real living wage which is optional increased to £12.60 per hour and £13.85 per hour in London.
Checking that you are receiving the NMW at the start of the tax year is important so you can rectify any problems as early as possible.
You can use the free .GOV national minimum wage and national living calculator to assess if you are being paid the correct hourly rate.
The recent revisions to the national minimum wage are part of the government’s ongoing commitment to improving the living standards of low-income workers.
These changes aim to align wages with inflation and the increasing cost of living. In April 2023, the UK saw a significant rise in the minimum wage rates across all categories, marking one of the highest increases in recent years.
Similarly, younger employees and apprentices benefited from proportional increases, reflecting the government’s focus on broad-based wage growth.
This adjustment is intended to alleviate financial pressures and enhance disposable income for many PAYE workers.
The impact of the National Minimum Wage rise on your take-home pay
The recent increase in the national minimum wage directly influences your take-home pay. Being aware of these factors helps you make informed decisions about your finances.
With higher hourly rates, you can expect an increase in your gross income, which translates into more money in your pocket after deductions.
This adjustment provides an opportunity to improve your financial well-being, allowing for better budgeting and savings.
However, it’s essential to understand that the rise in gross pay may affect other financial considerations, such as tax liabilities and benefits.
As your income increases, you could potentially move into a higher tax bracket or see adjustments in benefits eligibility.
Calculating your new take-home pay
To accurately calculate your new take-home pay following the NMW rates rise, you need to consider several elements.
Begin by identifying your new hourly rate based on your age and employment status. Multiply this rate by the number of hours you work each week to find your weekly gross pay.
Next, account for statutory deductions such as income tax and national insurance contributions which are automatically taken from your salary by your employer before you are paid.
Keep in mind that changes in your gross pay might necessitate adjustments in your tax code, which can affect your net income.
Finally, consider any additional deductions, such as pension contributions or student loan repayments.
Subtract these from your gross pay to determine your final take-home pay which you can use to effectively manage your finances and budget for future expenses.
What to do if you aren’t being paid the National Minimum Wage
If you believe you’re not receiving the national minimum wage you should start by discussing the matter directly with your employer.
Should this not resolve the issue, you can:
- Reach out to ACAS: The Advisory, Conciliation and Arbitration Service (ACAS) can provide guidance and facilitate dispute resolution between employers and employees.
- Lodge a complaint with HMRC: You can submit a complaint to Her Majesty’s Revenue and Customs (HMRC) online or via phone, regardless of your employment status.
If an employer fails to adhere to the NMW requirements it can result in significant penalties, including fines and reputational damage.
