Chancellor John Healey has confirmed new Minimum Wage and National Living Wage rates in his first Budget. The National Minimum Wage will rise by 3.9% from next April, taking rates from £10.85 per hour up to £11.27 in the 2027 to 2028 tax year.
The rise will apply to workers aged 18, 19 and 20, with rates increasing broadly in line with older workers. It is a smaller rise than the 26% increase Labour has put in place for younger workers since returning to power in 2024, and means rates still remain below the National Living Wage for older workers.
End of Larger Increases for Younger Workers
The rise ends the trend of hiking the National Minimum Wage for 18 to 20-year-olds by more than the rate for older workers, instead raising it roughly in line with the rate for over 21s.
The National Living Wage applies to workers aged 21 and over, and this will also be given a 3.9% rise from April next year, taking hourly rates from £12.71 to £13.20 in the 2027 to 2028 tax year.
Above Inflation
The 3.9% increase, which will take effect from April 2027, is above the Consumer Prices Index (CPI) inflation rate, which the Office for National Statistics (ONS) confirmed as 3.5% in the 12 months to September 2026.
The Low Pay Commission (LPC), which advises the government on minimum wage rises, said in April this year that the National Living Wage would need to increase by around 3.7% in 2027 to £13.18 an hour in order to keep up with how it expected average pay to rise.
Commission Remit Adjusted
In March, the government tweaked the commission's remit to give it more scope to take labour market conditions into account when setting the minimum wage for 18- to 20-year-olds.
The LPC said in April: "Our remit asks us to use the benchmark of two-thirds of median earnings as the key reference point for future rates. We estimate that to maintain the NLW at two-thirds of median earnings, a rate between £13.02 and £13.34 (or an increase of between 2.4 and 5.0 per cent) would be required in April 2027, with a central estimate of £13.18 (3.7 per cent)."
"These projected figures above are indicative only. The final recommended rate will be subject to the LPC's deliberations later in the year, which must also take account of the state of economy, labour market and living costs."
