National living wage 2026: Employer obligations & pay rates
The National Living Wage is a legal right for workers. Learn the eligibility criteria, calculations, and latest rates.
Written by Ebony-Storm Halladay — Freelance accounting copywriter, 10 years. Read Ebony's full bio
Published Tuesday 21 July 2026
Table of contents
Key takeaways
- Those over the age of 21 are entitled to the National Living Wage, which is £12.71 per hour from April 2026. There are different rates for workers under 21 and for apprentices.
- You must update pay rates in your payroll system when changes come into place. This can include when an employee has a birthday, or a new minimum rate is introduced.
- The minimum wage is calculated differently depending on whether your employees are on salaried hours, time work, or unmeasured work. Modern payroll software can help calculate the correct rates, send reminders when increases are due, and automatically update when new government rates are introduced.
What is the National Living Wage?
The National Living Wage is the legal minimum rate of pay you can give employees over the age of 21. Don’t confuse this with the National Minimum Wage, which applies to workers aged 20 and under.
What’s the minimum wage UK employers need to pay?
Minimum wage rates change every year on 1 April, and they differ depending on the age of the employee. The hourly rates for April 2026 onwards are:
- £12.71 for those aged 21 and over (the National Living Wage)
- £10.85 for those aged 18 to 20
- £8 for under 18s
- £8 for apprentices aged under 19, or 19 and over in their first year of apprenticeship
Who gets the National Living Wage?
Those above the age of 21 get the National Living Wage, including apprentices who have completed their first year.
National Living Wage vs real living wage
The National Living Wage is the legal minimum that employers must pay employees over the age of 21. It’s set by the UK government. The National Living Wage is £12.71 from April 2026.
The real living wage in the UK is independently calculated by the Living Wage Foundation. UK employers can volunteer to pay the real living wage, but must pay at least the National Living Wage for over 21s. The real living wage is currently £13.45 across the UK, and £14.80 for those based in London.
How to comply with minimum wage rates
Here’s how to comply with minimum pay laws and take care of your employer payroll responsibilities.
1. Check ages and status changes
If you have employees below the age of 21, their minimum rate will change as they get older. So make sure you increase an employee’s pay when they turn 21.
If you have apprentices, you may also need to update their pay rate throughout their training. In the first year, all apprentices receive £8 per hour. For apprentices who’ve completed the first year of their training, their rate increases to the one that aligns with their age. For example, an apprentice who’s 22 years old should receive £12.71 per hour once they’ve finished their first year.
You can check which types of workers are entitled to the National Minimum Wage on the GOV.UK website.
2. Update pay rates and pay templates
Make sure rates of pay are up to date in your payroll system. If you’re using modern payroll software where you can set up pay templates for employees, you should be able to update it with the new rate of pay so that this applies to all future pay runs. Payroll software will calculate minimum wages and living wages for you.
It’s worth setting a regular time each year to update the pay templates with the annual increases. And if your employees receive pay rises throughout the year, set time aside to update your pay rates and templates in your payroll system.
3. Review deductions and offsets
You need to include certain payments in minimum wage calculations and exclude others.
For example, you can’t include employee work travel or uniforms and equipment purchases in minimum wage calculations if:
- if you pay for your employees’ work travel
- if your employees buy uniforms or equipment for work and you don’t reimburse these costs
You need to include Income Tax and National Insurance contributions in minimum wage calculations, as well as wage advances and loans. Check what’s included in minimum wage calculations on the GOV.UK website.
4. Recalculate pay for salaried and variable hours
If you pay employees an annual salary and a consistent amount each month, they probably do ‘salaried hours work’. To work out whether they receive the minimum wage for their age, you identify how many basic hours they do in return for their salary – not including things like overtime. You’ll find the information needed to work out their annual basic hours in their employment contract.
The minimum wage calculation is:
Average hours per pay packet = basic annual hours ÷ number of times paid per year ( such as 12)
Hourly rate = average pay packet amount ÷ average hours per pay packet
Not all salaried workers do salaried hours – they might do ‘time work’, or ‘unmeasured work’. Employees doing time work are paid for the hours they work, which means income can change with each pay.
The average hourly rate for people doing time work must meet the minimum wage rate for their age. For example, a person who is 21 years old and does 150 hours work a month must be paid at least £1906.50 for that month’s work:
£1906.50 = 150 x £12.71 (the National Living Wage)
Unmeasured work is where the person is paid for a particular task – for example, being paid £1000 to fix a piece of factory machinery. To work out if this pay meets minimum wage standards, the person can record their hours, and you can use GOV.UK’s minimum wage calculator, or you and the individual can make an average daily agreement of hours.
5. Track travel time, training, and sleep-ins
For all types of working (salaried hours or otherwise), training time and time spent travelling for business both count towards the minimum wage calculation. Don’t include the regular commute between an employee’s home and workplace.
In some cases, employees may be contracted for sleep-in shifts where they would normally be asleep for most or all of their shift. Workers are woken up to perform a specific task or activity, when required.
- In 2021, a court case clarified that a sleep-in worker’s hours are only eligible for the National Minimum Wage if they are awake for the purpose of working. Time where they are permitted to sleep cannot be taken into consideration for National Minimum Wage calculations.
- If the expectation is that a worker will spend most of their time on shift performing tasks, with sleep permitted between tasks, it’s more likely that all hours of the shift contribute to National Minimum Wage calculations.
It’s worth speaking with an accountant, bookkeeper, or payroll specialist to make sure you’re calculating wages correctly for sleep-in shifts.
6. Keep records and notify staff
Your records should prove you’re meeting UK minimum wage requirements.
- Your payroll records you keep should suffice as evidence for HMRC, since they contain details of your staff pay and deductions.
- You also need to keep records of agreed working hours, pay, and conditions, and documents that show why workers aren’t entitled to the minimum wage (if this is the case).
Government guidance states that you should keep these records for at least six years.
Make sure you let staff know if their rate of pay is changing, and when the change will take place.
Meet the National Living Wage with Xero
Xero payroll software helps you deal with the National Living Wage admin fast.
It automatic updates with UK National Living Wage and National Minimum Wage rates automatically, and does calculates your employees’ pay and deductions for you. And when you’re ready, Xero lets you make automated real-time information (RTI) submissions to HMRC – directly from the software. Job done!
And to reduce your load even further, give your team access to Xero Me – so your employees can request leave, see their allowances, and view their paycheques from their phones.
FAQs on the National Living Wage
The National Living Wage is a legal requirement for workers over the age of 21. Make sure you’re meeting your requirements by checking the extra information below.
What is the National Living Wage in 2026?
The National Living Wage was £12.21 and changed in April 2026, when it rose to £12.71 for people over the age of 21.
What’s the difference between NLW and the National Minimum Wage?
The National Minimum Wage is for workers aged 18–20. Those over the age of 21 must be paid the National Living Wage.
How much is 40 hours a week at the National Living Wage?
Forty hours a week at the National Living Wage (as of April 2026) is £508.40 per week. The exact amount you’re paid depends on whether you work salaried hours or do time work or unmeasured work.
When do new rates apply to someone who has a birthday?
When your employee has a birthday and becomes entitled to a new minimum rate of pay, you don’t have to start paying the new rate on their birthday – you start paying the new rate in the full tax period following their birthday. For example, if your payroll runs from 28 June to 27 July and your employee turns 21 on 14 July, their new rate starts in the next pay period: 28 August to 27 September.
Do tips or service charges count toward minimum wage?
No – these are separate from the National Minimum Wage calculation.
How should I treat accommodation in minimum wage calculations?
Include accommodation in minimum wage calculations. The offset rate from April 2026 is £11.10 per day (£77.70 per week) – if you charge more than this, the additional amount is deducted from the employee's pay that counts towards their minimum wage. This means that higher accommodation costs equate to lower pay calculations. If you offer accommodation for free, this is added to the minimum wage calculation for your staff.
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