What is the National Living Wage in 2026/27?

The National Living Wage is the minimum wage for workers aged 21 and over. From April 2025 it was set at £12.21 per hour. The April 2026 rate is announced by the government each autumn following Low Pay Commission recommendations — check gov.uk/national-minimum-wage-rates for the current figure. At £12.21/hr for 40hr/wk, annual salary is approximately £25,397.

What is the difference between the National Living Wage and National Minimum Wage?

The National Living Wage (NLW) applies to workers aged 21 and over. The National Minimum Wage (NMW) is the broader term covering all age groups. Workers aged 18–20 have a lower NMW rate, as do 16–17 year olds and apprentices. There is no separate 'Real Living Wage' in law — that term refers to a voluntary higher rate calculated by the Living Wage Foundation.

Do tips count toward the National Living Wage?

No. From 1 October 2024, tips, gratuities and service charges cannot be counted toward the National Living Wage or National Minimum Wage. Employers must pass all tips to workers on top of their qualifying minimum wage pay. This is enforced under the Employment (Allocation of Tips) Act 2023.

What happens if an employer pays below the National Living Wage?

HMRC enforces the National Living Wage and can investigate employers, issue penalty notices of up to 200% of the underpayment (minimum £100), and publicly name non-compliant employers. Workers can also report underpayment to HMRC and claim back-pay for up to 6 years of underpayment. There is no time limit for workers to report.

National Living Wage UK 2026/27 — Rates, Annual Salary & Tax Take-Home

Rate check: NLW rates are set from 1 April each year following Low Pay Commission recommendations, typically announced the previous November. The rates below are from April 2025. April 2026 rates should be verified at gov.uk/national-minimum-wage-rates.

Current NLW and NMW rates (from April 2025)

Worker category	Hourly rate (April 2025)	Who it applies to
National Living Wage	£12.21	Workers aged 21 and over
National Minimum Wage (18–20)	£10.18	Workers aged 18, 19 and 20
National Minimum Wage (16–17)	£7.55	Workers aged 16 and 17
Apprentice rate	£7.55	Apprentices aged under 19, or aged 19+ in their first year

April 2026 update: The government announces the following year's rates each November. The April 2026 NLW rate was set after my knowledge cutoff — verify the current rate at gov.uk before relying on figures for payroll or employment contracts.

NLW rate history

Year (April)	NLW rate (21+)	Change
April 2021	£8.91	Extended to age 23+
April 2022	£9.50	+6.6%
April 2023	£10.42	+9.7%
April 2024	£11.44	+9.8%; extended to age 21+
April 2025	£12.21	+6.7%
April 2026	Check gov.uk	—

Annual salary at NLW — by hours worked

Based on the £12.21/hr NLW (April 2025). Multiply by your own hourly rate if the April 2026 figure differs.

Hours per week	Weekly pay	Monthly pay	Annual salary
16 hrs (part-time)	£195.36	£847	£10,159
20 hrs	£244.20	£1,059	£12,698
25 hrs	£305.25	£1,323	£15,873
30 hrs	£366.30	£1,587	£19,048
37.5 hrs (full-time)	£457.88	£1,984	£23,810
40 hrs	£488.40	£2,117	£25,397

Based on 52 weeks × hours × £12.21. Actual annual pay may vary with bank holidays, overtime and shift patterns.

Tax and NI take-home on NLW earnings

NLW workers at 37.5hrs/week earn approximately £23,810/year (at April 2025 rates). Here's the 2026/27 tax breakdown:

	Amount
Gross annual salary	£23,810
Personal Allowance (tax-free)	−£12,570
Taxable income	£11,240
Income tax (20%)	£2,248
National Insurance (8% on £12,570–£23,810)	£899
Take-home pay	£20,663/yr = £1,722/mo
Effective tax rate	13.2%

Calculate your exact take-home

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What counts (and doesn't count) as qualifying pay

Not all pay elements count toward the National Living Wage. Employers must ensure the qualifying pay equals or exceeds the NLW rate.

Counts as qualifying pay:

Basic salary and hourly wages
Shift premiums and unsocial hours payments where paid as part of basic pay
Performance-related pay that is guaranteed

Does NOT count as qualifying pay:

Tips and gratuities — from October 2024, tips cannot contribute to NLW/NMW (Employment (Allocation of Tips) Act 2023)
Overtime premium (the extra above the normal hourly rate)
Allowances (e.g. London weighting, tool allowances)
Benefits in kind (company car, health insurance)
Employer pension contributions
Loans and advances

Salary sacrifice and deductions: If a worker sacrifices salary (e.g. for pension or cycle-to-work scheme), the remaining pay after deductions must still equal or exceed the NLW. Deductions for uniforms, tools or accommodation that take a worker below the NLW are illegal.

Enforcement — what happens if an employer underpays

HMRC enforces the National Living Wage. Penalties for underpayment:

Arrears: The employer must repay all underpayments back to the worker, calculated at the current NLW rate (not the rate when underpayment occurred)
Financial penalty: 200% of total underpayment (minimum £100, maximum £20,000 per worker)
Naming: HMRC publicly names employers who underpay, with reputational consequences
Criminal prosecution: In serious or repeated cases

Workers can report underpayment anonymously to HMRC's NMW helpline and claim 6 years of back pay.

Real Living Wage vs National Living Wage

The Real Living Wage (set by the Living Wage Foundation) is a voluntary higher rate based on the actual cost of living. It is not a legal minimum:

	National Living Wage (legal)	Real Living Wage (voluntary)
Set by	Government (following Low Pay Commission)	Living Wage Foundation
Rate (2025)	£12.21/hr (21+)	£12.60/hr (UK); £13.85/hr (London)
Legal requirement?	Yes — employers must pay at least this	No — voluntary accreditation
Covers	Workers aged 21+	All adult workers regardless of age

Frequently asked questions

From April 2025, the National Living Wage was £12.21/hr for workers aged 21 and over. The April 2026 rate is announced by the government each November following Low Pay Commission recommendations. Verify the current rate at gov.uk/national-minimum-wage-rates. At £12.21/hr for 37.5hrs/week, annual gross salary is approximately £23,810.

The National Living Wage (NLW) is the rate for workers aged 21 and over. The National Minimum Wage (NMW) is the broader framework covering all age groups — workers aged 18–20 have a lower rate (£10.18 from April 2025), as do 16–17 year olds and apprentices (£7.55). The Real Living Wage is a separate, voluntary higher rate set by the Living Wage Foundation — it has no legal force.

No. From 1 October 2024, tips, gratuities and service charges cannot count toward the National Living Wage or National Minimum Wage. Under the Employment (Allocation of Tips) Act 2023, all tips must be passed to workers on top of their minimum wage. An employer who uses tips to meet their NLW obligation is in breach of the law.

HMRC can investigate, issue penalty notices of up to 200% of the underpayment (minimum £100), require the employer to repay all arrears at current rates, and publicly name the employer. Workers can report underpayment to HMRC's NMW helpline and claim back pay for up to 6 years. Serious or repeated violations can lead to criminal prosecution.

National Living Wage UK 2026/27 — Rates, Tax & Annual Salary