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The recent UK budget announced that payroll costs are set to increase again in April 2026. The government has announced the new minimum wage rates that will come into force from 01 April 2026 for all workers in the UK. This is going to have a big impact on entities employing people in the UK or sending employees to work in the UK.
What are the National Minimum Wage rates for 2026/2027?
The new rates are as follows:
Aged 21 and over
Increasing from GBP 12.21 to GBP 12.71
Aged 18 to 20
Increasing from GBP 10.00 to GBP 10.85
Aged under 18
Increasing from GBP 7.55 to GBP 8.00
Apprentice rate
Increasing from GBP 7.55 to GBP 8.00
The new rates mean that workers aged 21 and over will get a 4.1% increase. It is estimated that 2.4 million workers will benefit from the rise, with a further 300,000 apprentices and workers aged under 21 being given a rise of between 6.0% and 8.5%.
The larger rise for younger workers is part of the government’s efforts to work towards having a single rate for workers regardless of age but has already had a negative effect and increased youth unemployment.
What actions should business owners take?
Budgeting for these additional costs from 01 April 2026 will be important, especially if a business has plans to hire staff. The earlier the preparation begins, the better. Some key steps businesses should consider are:
Reviewing payroll: This involves checking which employees will be affected by the new rates.
Updating budgets and forecasts: Higher wage costs should be factored into cash flow planning from 01 April 2026 onwards.
Considering pricing and productivity: It is worth assessing whether higher costs can be absorbed within current prices, or if they need to be uplifted to maintain profitability. Adjustments to the work staff are doing or their efficiency could also reduce staffing needs in the coming year.
Checking for knock-on effects: These wage increases may create pressure to adjust pay for employees who are paid above the minimum rates. A review of other salaries may be necessary to maintain fairness and morale.
Consider the tax jurisdiction: Do non-UK entities need to bring workers to the UK on a short-term basis rather than employ directly in the UK.
In a world of ever increasing costs, a company’s workforce tends to be the largest outgoing so careful planning is becoming more important.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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