National Living Wage Rises to £13.21 an Hour from April 2027: What Employers Need to Budget For
The National Living Wage for workers aged 21 and over will rise 3.9%, or 50p, to £13.21 an hour from 1 April 2027, after the government accepted the Low Pay Commission's recommendations in full on 28 October 2026.
By Entrepreneur Group · Published
The National Living Wage will rise by 50p, or 3.9%, to £13.21 an hour for workers aged 21 and over from 1 April 2027. The government accepted the Low Pay Commission's (LPC) recommendations in full on 28 October 2026, Budget day, and every other minimum wage rate rises by the same percentage.
The government says the increase adds £910 a year to the gross pay of a full-time worker on the National Living Wage. For employers in hospitality, retail and other lower-paid sectors, it is the main pay-cost figure to build into 2027/28 budgets.
The new rates
The LPC's announcement sets out the rates from April 2027:
- National Living Wage (21 and over): £13.21, up 50p from £12.71.
- 18 to 20 year olds: £11.27, up 42p.
- 16 to 17 year olds: £8.31, up 31p.
- Apprentice rate: £8.31, up 31p.
- Accommodation offset: £11.53 a day, up 43p.
The LPC says its recommendations were agreed unanimously and that it expects the rates to rise in real terms over the period to April 2027.
Why the rise is smaller than the target
The government's remit asks for the National Living Wage to reach two-thirds of median hourly earnings by October 2027. In its advice to government, the LPC estimates that hitting that point would need £13.44, a 5.7% rise. It chose £13.21 instead, below the target, while saying it still makes progress towards it.
The LPC gives several reasons. It describes a "low hire, low fire" labour market, with vacancy rates at their lowest outside the pandemic since 2014. Businesses in consumer-facing services reported weak spending and rising costs, and many said they had reached the limit of what they could absorb or pass on. Output in retail and hospitality has not recovered to pre-pandemic levels, and hiring in both sectors is particularly weak. Several employer bodies called for below-inflation increases for the first time.
Young workers and apprentices
The government wants to lower the National Living Wage age threshold from 21 to 18 over time. The LPC recommends pausing further progress for now and raising the 18 to 20 rate by the same 3.9%, citing slower demand for young workers. Youth unemployment is above its COVID peak, at rates last seen in 2015. The LPC also cites employer concerns about the cost of apprentices as a reason for keeping that rate's rise to 3.9%.
What this means for employers
This section is editorial guidance, not legal or financial advice.
- Update your 2027/28 budget now. Work out the cost for every worker below £13.21, including on-costs such as employer National Insurance and pension contributions.
- Look beyond the lowest paid. Staff paid just above the new rate may expect their pay to rise too, to keep differentials. Decide your approach early.
- Check age bands and apprentices. Make sure your payroll moves people to the right rate when they have a birthday or finish the first year of an apprenticeship.
- Review prices and rotas. If you plan to raise prices, give customers notice. Consider how shift patterns and productivity tools might offset some of the cost.
- Watch for related changes. Retail, hospitality and leisure businesses in England may also benefit from higher business rates relief from April 2027, which could offset part of the increase.
Frequently asked questions
What is the National Living Wage from April 2027?
The National Living Wage for workers aged 21 and over will be £13.21 an hour from 1 April 2027, up 50p or 3.9% from £12.71.
What is the minimum wage for 18 to 20 year olds in 2027?
The rate for 18 to 20 year olds will be £11.27 an hour from April 2027. The 16 to 17 year old and apprentice rates will both be £8.31.
How much will a full-time worker on the National Living Wage gain?
The government says the April 2027 increase adds £910 a year to the gross annual earnings of a full-time worker on the National Living Wage.
Sources
- Low Pay Commission: LPC recommendations take the National Living Wage to £13.21 (28 October 2026) (reviewed 29 October 2026)
- Low Pay Commission: LPC advice to Government on 2027 minimum wage rates (28 October 2026) (reviewed 29 October 2026)
- HM Treasury: Budget 2026: Breathing space for today, hope for the future (28 October 2026) (reviewed 29 October 2026)