New National Minimum & National Living Wage rates for 2025
The UK government has confirmed that National Minimum Wage (NMW) and National Living Wage (NLW) rates will increase from 1 April 2025. These updates, announced in a press release on 4 February 2025, mark a significant shift in how statutory pay is calculated, with a renewed focus on the cost of living and inflation.
For employers, understanding these changes is crucial. Here’s what you need to know.
Each year, the Low Pay Commission reviews and recommends changes to the minimum wage, but for the first time, the cost of living and inflation have been key considerations in setting the new rates. This shift comes following an instruction from Prime Minister Keir Starmer soon after taking office in 2024, as part of the government’s broader plan to introduce a ‘genuine living wage’.
Additionally, the government has long-term plans to align the minimum wage for 18- to 20-year-olds with the National Living Wage and create a single adult wage rate—although this will take several years to implement fully.
From 1 April 2025, the following wage increases will take effect:
National Living Wage (for workers aged 21 and over): Increasing from £11.44 to £12.21 per hour.
National Minimum Wage (for 18- to 20-year-olds): Rising from £8.60 to £10.00 per hour.
Apprentices and workers aged 16-17: Increasing from £6.40 to £7.55 per hour.
These changes are designed to support low-paid workers while ensuring wages keep pace with rising living costs.
As an employer, these changes may require you to:
Review and adjust payroll systems to reflect the new wage rates from April 2025.
Assess budget impacts, particularly for businesses employing many minimum-wage workers.
Ensure compliance, as failure to pay the correct rates could result in penalties.
If you run a small or medium-sized enterprise (SME), now is the time to review your financial planning and consider the impact of these wage increases.
Looking Ahead: The Future of Wage Reform
The government’s long-term goal is to create a single adult wage rate, meaning that younger workers (aged 18-20) will eventually receive the same minimum pay as those aged 21 and over. While this won’t happen overnight, the 2025 increases mark the first step towards closing the gap.
With the cost of living continuing to rise, further wage adjustments could be expected in the coming years. Employers and employees alike should stay informed about any additional changes that may be introduced.
Need Help Navigating the Changes?
For employers, understanding and implementing these wage changes is key to staying compliant and retaining staff. If you need guidance on adjusting pay structures, handling payroll, or managing HR processes, we’re here to help.
Get in touch today to discuss how we can support your business in preparing for the new wage regulations.
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