Millions of workers across the United Kingdom are set for a significant financial uplift following a major government announcement on pay rates. Chancellor Rachel Reeves has confirmed substantial increases to both the National Living Wage and National Minimum Wage, set to take effect from April 2026.
Details of the Wage Increases
During the Labour Party's Budget announcement on Wednesday, November 26, 2025, the Chancellor outlined the new rates aimed at supporting low-income households. The headline change sees the National Living Wage for workers aged 21 and over rise from £12.21 to £12.71 per hour. This represents an annual increase of approximately £900 for a full-time worker, equating to an extra £1,500 before tax for many.
The increases are not limited to the oldest workers. Younger employees will also see a boost to their pay packets:
- For 18-to-20-year-olds, the minimum wage will jump by 8.5%, from £10 to £10.85 per hour.
- The rate for 16-17-year-olds and apprentices will increase by 6%, from £7.55 to £8 per hour.
- The accommodation offset rate, which applies when an employer provides housing, will rise from £10.66 to £11.10.
Government's Rationale for the Pay Rise
Chancellor Rachel Reeves directly addressed the ongoing financial pressures facing the public. "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," she stated. "Too many people are still struggling to make ends meet and that has to change."
She emphasised that the policy was designed to ensure that "those on low incomes are properly rewarded for their hard work." The move is expected to benefit an estimated 2.4 million workers directly through the National Living Wage increase alone.
Reaction and Economic Context
The announcement was welcomed by low-pay advocates but comes with recognition of the challenging economic climate. Baroness Philippa Stroud, Chair of the Low Pay Commission (LPC), provided context, noting the dual pressures on workers and businesses.
"In our discussions this year with workers and employers alike, it has been clear that no-one is having an easy time," Baroness Stroud said. "Despite sustained real increases in the minimum wage, low-paid workers are still challenged by the cost-of-living crisis. At the same time, employers, particularly small businesses, are under real pressure."
The new wage rates will officially come into force at the start of the new tax year in April 2026. This gives businesses several months to prepare for the increased payroll costs, which the government hopes will support both employee living standards and sustainable business growth.
