Every employer, whatever its size, must pay each worker at least the National Minimum Wage or National Living Wage for their age, measured as an average over each pay reference period after certain deductions. From 1 April 2026 the National Living Wage for workers aged 21 and over is £12.71 an hour. Underpayment means arrears at current rates, a penalty of up to 200% of the arrears capped at £20,000 per worker, and possible public naming.

What are the rates from April 2026?

Age band From 1 April 2026 From 1 April 2025
21 and over (National Living Wage) £12.71 £12.21
18 to 20 £10.85 £10.00
Under 18 (above school leaving age) £8.00 £7.55
Apprentice £8.00 £7.55

The rates change on 1 April each year. HMRC’s guidance on calculating the minimum wage says an increase applies from the first pay reference period starting on or after the date of change, and the same approach applies when a birthday moves a worker into a higher band. A monthly paid worker whose pay period runs from the 15th of each month therefore moves to the new rate from the period starting 15 April.

The apprentice rate applies to apprentices under 19, and to apprentices aged 19 or over in the first year of their apprenticeship. Once an apprentice aged 19 or over completes the first year, they must get the rate for their age band.

Who must be paid the minimum wage?

The minimum wage applies to workers, not only employees. GOV.UK lists part time staff, casual labourers, agency workers, homeworkers and pieceworkers, apprentices, trainees and workers on probation, disabled workers, agricultural workers, foreign workers, seafarers and offshore workers, and some people living in the employer’s home who are treated as one of the family, such as au pairs. A contract to pay below the minimum wage is not legally binding.

The rules do not apply to the genuinely self employed, company directors, volunteers and voluntary workers, family members living in the employer’s home, students on a placement of up to one year as part of a higher or further education course, people work shadowing, armed forces members, prisoners and people living and working in a religious community, among others. Employers offering internships or work experience should check whether the person is entitled.

How is minimum wage pay tested?

Compliance is tested per pay reference period, which is the period the pay covers. It can be up to one calendar month but never longer. The worker must be paid, on average, at least the minimum rate for the time worked in that period. HMRC’s guidance classifies work as time work, salaried hours work, output work or unmeasured work, and the hours that count depend on the type.

Payments that do not count

  • Payments for the employer’s own use or benefit, such as an employer paid amount for travel to work.
  • Costs the worker bears for the job and is not refunded, such as tools, uniform or safety equipment, which reduce minimum wage pay.
  • Tips, service charges and cover charges.
  • Premiums for working unsocial hours on a shift.

Deductions that do not reduce minimum wage pay

Regulation 12 of the National Minimum Wage Regulations 2015 treats deductions for the employer’s own use and benefit as reductions in minimum wage pay, with exceptions. Deductions for misconduct where the worker is contractually liable, repayments of loans or wage advances, recovery of accidental overpayments, share purchases, and payments for goods or services the worker chooses to buy from the employer (such as meals) do not reduce minimum wage pay. A purchase the employer requires in connection with the job, and does not reimburse, does reduce it. Income Tax and National Insurance deductions do not reduce it either.

Accommodation and the offset

Accommodation is the only benefit in kind that counts towards the minimum wage. From April 2026 the accommodation offset is £11.10 a day or £77.70 a week. If the employer charges more than the offset, the excess reduces minimum wage pay. A charge at or below the offset has no effect. Free accommodation adds the offset to minimum wage pay. Rent, utilities, furniture and laundry are all accommodation charges, and accommodation provided by a connected person or company still counts as provided by the employer.

Can salary sacrifice take pay below the minimum wage?

No. HMRC’s salary sacrifice guidance says an arrangement must not reduce an employee’s cash earnings below the National Minimum Wage and that employers must have procedures to cap the sacrifice. The minimum wage guidance adds that a genuine sacrifice is a reduction in contractual pay, not a deduction, so the sacrificed amount does not count as pay; whether an arrangement is a sacrifice or a deduction depends on how it actually operates, not its label. Workers close to the minimum, or whose rate is about to rise on 1 April or on a birthday, need checking before each pay rise date. See our page on salary sacrifice schemes and on auto enrolment pension duties.

How does a uniform deduction affect minimum wage pay?

Illustration only. Sam is 22, paid weekly for 35 hours at £13 an hour, so £455 a week. The employer deducts £20 a week for a compulsory uniform.

  1. Minimum wage pay is £455 minus £20 = £435.
  2. £435 divided by 35 hours is about £12.43 an hour, below the £12.71 National Living Wage.
  3. The required minimum is 35 times £12.71 = £444.85, so the shortfall is £9.85 a week.

The employer must pay the arrears immediately. Stopping the uniform charge, or raising the rate, fixes future weeks; it does not cure past underpayment.

What records must an employer keep?

Records proving minimum wage compliance must be kept for at least six years, counted from the last day of the pay reference period after the one they cover. They can be paper or electronic, but the employer must be able to produce the records for a single pay reference period in one document. Payroll records showing total pay (including deductions, allowances and tips) and total hours (including absences and overtime) are the core, together with contracts and documents showing why any worker is not entitled. A worker can ask in writing to see their records. Good payslips help; see P60, P45 and payslips.

How does HMRC enforce the minimum wage?

HMRC enforces the minimum wage on behalf of the Fair Work Agency and can check employers at any time, including after a worker complaint. Failing to pay the minimum wage, or falsifying records, is a criminal offence.

  • Arrears at current rates. Under section 17 of the National Minimum Wage Act 1998, arrears are the higher of the original shortfall and that shortfall uplifted to the rate in force when the arrears are determined, so delay increases the cost.
  • Financial penalty. Section 19A sets the penalty at 200% of the underpayment for each pay reference period, with the amount for any one worker capped at £20,000 and a minimum penalty of £100. If the arrears and half the penalty are paid within 14 days, the penalty is treated as paid in full.
  • Naming. Employers found underpaying may be named by the government.
  • Tribunal claims. Workers can also go to an employment tribunal, including for unfair dismissal linked to a minimum wage dispute.

For how HMRC approaches wider payroll reviews, see HMRC employer compliance checks.

What are the most common mistakes?

  • Charging for uniforms or equipment, or requiring staff to buy them, without checking the effect on hourly pay.
  • Counting tips or service charges towards minimum wage pay.
  • Applying a 1 April increase or a birthday uplift from the wrong pay period.
  • Keeping an apprentice aged 19 or over on the apprentice rate after the first year.
  • Letting salary sacrifice or accommodation charges above the offset push pay below the rate.
  • Assuming a contract signed by the worker overrides the minimum. It cannot.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.