The Chancellor of the Exchequer, Rachel Reeves announced significant increases to the Minimum Wage rates on the eve of the Budget. The Chancellor confirmed that the government has accepted in full the proposals of the Low Pay Commission (LPC) for increasing minimum wage rates from 1 April 2025. The LPC’s advisory remit was overhauled by ministers in July to consider the cost of living.

The National Living Wage (NLW) rate will increase from £11.44 to £12.21 on 1 April 2025 and represents an increase of 77p or 6.7%. The NLW is the minimum hourly rate that must be paid to those aged 21 or over. The increase represents a pay rise of over £1,400 a year for someone working full-time and earning the NLW.

It was also announced that the National Minimum Wage (for 18-20 year olds) will increase from £8.60 to £10.00 an hour. This is largest increase ever in the NMW (an impressive 16.3% increase) that will see younger workers having their pay boosted by up to £2,500 next year. This increase is part of a move to narrow the gap in wage rates for 18-20 years olds and the NLW and ultimately create a single adult wage rate for all those aged 18 and over.

The NMW rates for 16 to 17 years old will increase from £6.40 to £7.55 – an increase of £1.15 or 18% per hour – from next April. The Apprentice Rate will mirror this increase in line with earlier recommendations by the LPC.