The National Minimum Wage and the National Living Wage are the hourly floors below which you cannot pay a worker. They rose on 1 April 2026, and underpayment is one of the few payroll errors HMRC pursues publicly: employers who fall short can be named, made to repay arrears at current rates, and fined up to 200% of the underpayment. This article explains the rates, who they apply to, what counts as pay, and the deductions that quietly push an employer below the line.
What are the rates from 1 April 2026?
There is one National Living Wage and three National Minimum Wage rates, set by age and by apprenticeship status.
| Category | Hourly rate |
|---|---|
| National Living Wage, aged 21 and over | £12.71 |
| Aged 18 to 20 | £10.85 |
| Under 18, above compulsory school leaving age | £8.00 |
| Apprentice rate | £8.00 |
| Accommodation offset, daily | £11.10 |
| Accommodation offset, weekly | £77.70 |
The previous rates, which applied until 31 March 2026, were £12.21 for the National Living Wage, £10.00 for 18 to 20 year olds, and £7.55 for both the under-18 and apprentice rates.
A worker moves to a higher rate from the start of the first pay reference period beginning on or after their birthday, not on the birthday itself.
Who is entitled to the minimum wage?
Almost everyone who works for you. Employees on any contract type, and workers including casual staff, zero-hours workers, agency workers, homeworkers, pieceworkers and commission-only workers, all qualify once they are above compulsory school leaving age.
The main exclusions are the genuinely self-employed, company directors who have no worker contract, volunteers who receive only reasonable expenses, family members living in the employer's home and working in the family business, and workers below school leaving age.
One point catches employers out. HMRC assesses minimum wage entitlement separately from tax status. Someone treated as self-employed for tax can still be a worker for minimum wage purposes, and the label on the contract does not settle it.
When does the apprentice rate apply?
The apprentice rate of £8.00 applies to apprentices under 19 in any year of their apprenticeship, and to apprentices aged 19 or over who are in the first year of their current apprenticeship.
Once an apprentice is 19 or over and has completed the first year with that employer, they move to the rate for their age. A 21 year old apprentice earns £8.00 in year one and £12.71 from year two, which is a substantial step and a common source of arrears when it is missed.
What counts as pay for minimum wage purposes?
Compliance is tested on the average hourly rate across the pay reference period, which is your pay cycle but never longer than one calendar month. It is not tested shift by shift.
Basic wages and salary count, along with bonuses, performance pay, commission related to the individual's own performance, and piece-rate payments. The accommodation offset counts where accommodation is provided.
These do not count towards minimum wage pay: tips, gratuities, service charges and cover charges, however they are paid; the premium element of overtime, meaning the extra above the basic hourly rate; shift premiums and allowances such as unsocial hours, London weighting, on-call and dangerous conditions payments; genuine expense reimbursements; and benefits in kind other than accommodation.
Which deductions can push you below the minimum?
This is where most underpayments happen, because the hourly rate on the contract is fine and the deduction is what causes the breach.
Deductions that reduce minimum wage pay, and therefore create risk, are those connected with the job or made for the employer's benefit: uniforms, tools, safety equipment, mandatory training, till shortfalls, disciplinary deductions, and any cost passed to the worker. A salary sacrifice arrangement also counts if it brings cash earnings below the minimum.
Deductions that do not reduce minimum wage pay are income tax and National Insurance, student loan repayments, genuine pension contributions including automatic enrolment, and deductions the worker freely agreed to for their own benefit, such as a gym membership or savings scheme, provided they are not connected to the employer's business costs.
The principle to hold on to: any deduction primarily for the employer's benefit, or connected with the employment, reduces minimum wage pay.
How does the accommodation offset work?
Accommodation is the only benefit in kind that can count towards minimum wage pay, and only up to the offset of £11.10 a day or £77.70 a week from 1 April 2026.
If you provide accommodation free, the offset amount is added to the worker's pay for minimum wage purposes. If you charge at or below the offset, there is no effect. If you charge above the offset, the excess reduces minimum wage pay. An employer charging £14.00 a day is £2.90 above the offset, and that £2.90 comes off the worker's minimum wage pay for each day charged.
How are hours counted?
Four categories, and the category decides which hours count.
Time work is paid by the hour or the shift, and all hours on shift count, including waiting time and time when the worker is available for work. Salaried hours work is an annual salary for set basic hours, spread across the year. Output work is paid per piece or task, and actual hours count unless there is a fair estimate agreement. Unmeasured work has no specified hours, and actual hours count unless there is a written daily average agreement.
A daily average agreement must be in writing, agreed before the pay reference period begins, and a realistic estimate of average daily hours. An agreement written after the fact does not work.
Work out a figure
Our free minimum wage calculator at https://www.moonworkers.co.uk/minimum-wage-calculator finds the correct rate for an age and apprenticeship status, and checks a worker's pay against the minimum including deductions and the accommodation offset, showing any arrears.
Where can I find official guidance and further help?
GOV.UK publishes the current rates and a minimum wage calculator for employers, and HMRC maintains the National Minimum Wage Manual for detailed cases. The Advisory, Conciliation and Arbitration Service (Acas) offers free impartial advice on pay disputes. Because employment status and contract terms decide who is entitled in the first place, check the contract itself and take independent advice where the position is genuinely uncertain rather than assuming the payroll treatment settles it.