The Government has published the official remit for the Low Pay Commission (LPC) to begin its work on setting the National Minimum Wage (NMW) and National Living Wage (NLW) rates that will apply from April 2026.
While the final figures won’t be confirmed until later in 2025, the direction of travel is already clear. Employers should be prepared for further increases in wage costs in April 2026.
National Living Wage likely to rise again
The Government has reiterated its commitment to ensuring the National Living Wage doesn’t fall below two-thirds of UK median earnings - a benchmark that defines the level of low hourly pay. Based on current forecasts, that means we could be looking at a NLW rate of £12.71 from April 2026, a 4.1% increase.
To put that into context, the current NLW rate for workers aged 21 and over is £12.21, up 6.7% from the previous year.
Narrowing the gap for younger workers
As part of its remit this year, the LPC will be consulting on narrowing the gap between the full NLW rate and the rate that applies to workers aged between 18 and 20 years old. The LPC will be putting forward recommendations on how to achieve a single adult rate in the years ahead.
What should employers do now?
Although the final rates won’t be known until October, these latest estimates are a strong indication of where things are headed. Here are a few things to consider:
- Factor these increases in when reviewing your payroll budgets for 2026.
- Consider the knock-on effect. If the NLW rises, pay for other roles may need to be adjusted to maintain structure and morale.
- Remember employer NICs and pensions. Increases in wages can also affect National Insurance contributions and pension auto-enrolment costs.
Final thoughts
The Government is clear in its aim to raise living standards through wage growth - and the LPC’s remit is designed to support that. For employers, this means keeping a close eye on wage forecasts and planning ahead for higher employment costs.
We’ll keep you updated as more information becomes available. In the meantime, if you’d like help reviewing your payroll plans or budgeting for potential increases, we’re happy to help.
See: https://www.gov.uk/government/news/national-living-wage-estimate-update