Minimum wage workers
From April 2026, both the National Living Wage (NLW) and National Minimum Wage (NMW) are increasing—bringing higher payroll costs for many businesses.
If you employ staff on or near minimum wage rates, it’s essential to understand these changes and ensure compliance.
New wage rates from April 2026
The updated rates for 2026/27 are:
| Category | 2026/27 | 2025/26 | Increase |
|---|---|---|---|
| National Living Wage (21+) | £12.71 | £12.21 | +£0.50 (4.1%) |
| 18–20 year olds | £10.85 | £10.00 | +£0.85 (8.5%) |
| 16–17 year olds | £8.00 | £7.55 | +£0.45 (6.0%) |
| Apprentices | £8.00 | £7.55 | +£0.45 (6.0%) |
The most notable increase is for 18–20 year olds, with an 8.5% rise.
Accommodation offset also increasing
If your business provides accommodation to employees, the accommodation offset rate is also rising:
- From £10.66 to £11.10 per day
This impacts how minimum wage compliance is calculated where accommodation is provided.
What this means for your business
These increases will directly affect:
- Payroll costs
- Employer National Insurance contributions (NICs)
- Profit margins
For businesses with a large number of minimum wage employees—such as:
- Hospitality
- Retail
- Care sector
The financial impact could be significant.
Compliance is critical
Failing to apply the correct minimum wage rates can result in:
- HMRC penalties
- Backdated wage payments
- Reputational damage
HMRC takes a strict approach to minimum wage compliance, and errors are often picked up during reviews.
Common mistakes to avoid
Employers should watch out for:
- Not updating pay rates from April 2026
- Incorrectly applying age-related rates
- Miscalculating pay where accommodation is provided
- Overlooking unpaid working time (e.g. training, travel between sites)
Planning ahead: What should you do now?
To prepare for April 2026:
- Review your current payroll structure
- Identify employees affected by rate increases
- Update payroll systems in advance
- Factor higher wage costs into budgets and pricing
- Assess the impact on staffing and recruitment plans
Final thoughts
Minimum wage increases are more than just a compliance issue—they are a business planning issue.
With rising wage costs and associated NIC increases:
Employers need to plan early to protect profitability.
Need help with payroll or wage compliance?
At Merranti Accounting, we support businesses with:
- Payroll management and compliance
- Workforce cost planning
- HMRC reviews and enquiries
If you want to understand how these changes will affect your business, get in touch with our team today.
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