National Minimum Wage 2026: the rates and the record-keeping rules

National Minimum Wage 2026: the rates and the record-keeping rules


 

The rates move every April, the rules do not

Almost every worker in the UK is entitled to the National Minimum Wage or the National Living Wage, and the rates rise each April. Underpaying, even accidentally and even by pennies, exposes employers to arrears, penalties of up to 200% of the amount owed, and public naming by the government. Most breaches are not deliberate exploitation; they are payroll errors, misunderstood deductions and poor records. This guide covers the rates in force and the record-keeping discipline that keeps employers safe.

The rates: what applies now

The rates below are the published rates applying from April 2025. New rates for April 2026 are set in the Autumn Budget each year, so check the current figures at gov.uk before running April payroll:

  • National Living Wage, age 21 and over: £12.21 per hour.
  • Age 18 to 20: £10.00 per hour.
  • Age 16 to 17: £7.55 per hour.
  • Apprentice rate: £7.55 per hour, for apprentices under 19, or aged 19 and over in the first year of the apprenticeship.
  • Accommodation offset: £69.93 per week, the maximum that can be counted towards minimum wage where the employer provides living accommodation.

The apprentice rate is the most misunderstood. It applies only while the conditions are met; an apprentice aged 19 or over who has completed the first year of the apprenticeship moves onto the age-appropriate rate, and many employers miss the transition.

Who counts and the common pitfalls

Nearly all workers qualify: full-time, part-time, casual, agency workers and most apprentices. The genuinely self-employed and company directors without employment contracts are outside the rules, but labelling someone self-employed does not make it so if the working reality looks like employment.

The classic pitfalls that drag the effective hourly rate below the minimum:

  • Unpaid overtime or time spent opening up, closing down and travelling between assignments that is not counted as working time.
  • Deductions for uniforms, tools or training costs that take pay below the minimum in the pay period.
  • Salaried workers whose contracted hours creep upwards without a pay review, quietly eroding the hourly rate.
  • Incorrectly applying the apprentice rate after the first year, or to workers who are not on a genuine apprenticeship.
  • Tips and service charges cannot be used to make up minimum wage; they sit on top of it.

Any of these can turn a compliant payroll into an underpayment across the whole workforce.

The record-keeping rules

This is where many employers fail, because HMRC does not just ask whether you paid enough; it asks you to prove it. Employers must keep records sufficient to show that minimum wage rules have been met, and must retain them for three years. In practice that means:

  • Hours worked by each worker, including overtime, split by pay period.
  • Rates paid and how they were calculated for salaried staff.
  • Deductions made and what they were for.
  • Details of any accommodation provided and the offset applied.
  • Records of apprentice ages and apprenticeship start dates, to evidence the correct rate.

HMRC can investigate and require payment of arrears going back up to six years, so thin records are a double risk: they make breaches more likely and harder to defend.

Penalties for getting it wrong

Where underpayment is found, HMRC issues a notice requiring the arrears to be repaid to the workers, plus a penalty of 200% of the total arrears, capped at £20,000 per worker. The penalty is halved if paid within 14 days. Employers who fail to comply can be publicly named in the government's naming rounds, and in the most serious cases directors face disqualification. HMRC targets its enforcement using PAYE data and worker complaints, so assuming nobody will notice is not a strategy.

A pre-April checklist for employers

  1. Confirm the new rates when announced and update payroll software before the first April run.
  2. Review salaried contracts against actual hours worked; adjust pay or hours where the hourly rate has drifted.
  3. Audit deductions for uniforms, equipment and training across the workforce.
  4. Check every apprentice's age and apprenticeship start date against the rate being applied.
  5. Brief line managers that working time includes the unpaid extras, not just the rostered shift.

Minimum wage compliance is a systems problem, not a goodwill problem, and it rewards employers who treat it as one. For businesses without a dedicated payroll team, getting the rates, records and reviews right every April is exactly the kind of recurring discipline that outsourced support handles well. Finex Outsourcing is a Global Business Services provider supporting UK employers with reliable payroll administration. The current rates are published at gov.uk.


Comments

Post a Comment

Popular posts from this blog

Payrolling Benefits in Kind: What Changes for Employers

Image
  For years, payrolling benefits in kind has been optional. Employers could report most benefits through the payroll, taxing them in real time, or stick with the familiar P11D at year end. That choice is ending. HMRC has confirmed that payrolling benefits will become mandatory from April 2026, and employers who still run benefits through P11Ds need to start preparing now. The change is simple in concept and fiddly in practice, which is exactly why it deserves attention well before the deadline. What mandatory payrolling means Under the current voluntary system, an employer registers with HMRC to payroll specific benefits, and the cash equivalent of those benefits is added to the employee's taxable pay each period, with tax collected through PAYE. No P11D is needed for payrolled benefits. From April 2026, that treatment becomes the default for almost all benefits in kind: company cars, private medical insurance, gym memberships, beneficial loans, accommodation and the rest will al...
Read more

Student loan deductions through payroll: the plan types

Image
Student Loan Deductions Through Payroll: The Plan Types Student loan deductions are one of those quiet payroll tasks that cause loud problems when they go wrong. Get the plan type wrong and you under-deduct (HMRC will notice) or over-deduct (the employee definitely will). Here is a practical guide to the plan types and what employers have to do. Why the plan type matters Student loan repayments are not one flat rule. HMRC operates several repayment plans, each with its own annual threshold and rate. Two employees on the same salary can owe completely different deductions depending on when and where they studied. The plan type comes from the employee or from HMRC; employers do not get to guess. The four plan types Plan 1 Plan 1 covers most borrowers who started their course before 1 September 2012 in England and Wales, plus all borrowers from Northern Ireland and Scotland regardless of start date. Deductions are 9% of earnings above the Plan 1 threshold, which the government...
Read more

Statutory payments calendar 2026/27: SSP, SMP, SPP rates and reclaims

Image
Statutory payments are the part of payroll where employers act as the government's paying agent: you pay the employee, then reclaim or offset according to the rules. Get the rates or the admin wrong and you either underpay staff or overpay HMRC. Here is the 2026/27 picture. Statutory Sick Pay SSP is paid from the fourth qualifying day of absence, at the flat weekly rate set each April. Employers cannot reclaim SSP; it is a cost of employment. The admin that matters: accurate absence records, because SSP calculations live or die on the dates, and keeping the fit-note evidence on file. Statutory Maternity Pay SMP runs for up to 39 weeks: 90 percent of average weekly earnings for the first 6 weeks, then the flat statutory rate (or 90 percent of earnings if lower) for 33 weeks. Employers reclaim 92 percent of SMP paid (103 percent for small employers eligible for Small Employers Relief). The reclaim goes through the Employer Payment Summary, reducing your PAYE bill. Get the EPS right o...
Read more