National Minimum Wage Rates 2025

The National Minimum Wage (NMW) and National Living Wage (NLW) are the legal minimum hourly rates employers must pay workers. Getting this wrong can result in significant penalties and reputational damage.

Current Rates (April 2024 - March 2025)

Age Group	Hourly Rate
21 and over (National Living Wage)	£11.44
18 to 20	£8.60
Under 18	£6.40
Apprentice rate	£6.40

New Rates (From April 2025)

Age Group	Hourly Rate	Increase
21 and over (National Living Wage)	£12.21	+6.7%
18 to 20	£10.00	+16.3%
Under 18	£7.55	+18.0%
Apprentice rate	£7.55	+18.0%

Key change: The gap between adult and youth rates is being narrowed significantly.

Who Gets the Apprentice Rate?

The apprentice rate applies to apprentices who are either:

• Aged under 19, OR
• Aged 19 or over and in the first year of their apprenticeship

After the first year (if aged 19+), they must receive the rate for their age group.

What Counts as Pay for Minimum Wage?

Included

• Basic pay
• Performance-related pay and bonuses
• Piece rates

NOT Included

• Tips and gratuities
• Premium for overtime or shift work
• Benefits in kind (except accommodation)
• Expenses
• Loans

The Accommodation Offset

If you provide accommodation, you can count a limited amount towards minimum wage:

Period	Maximum Offset (2024-25)
Daily	£10.66
Weekly	£74.62

This is the only benefit in kind that can count towards minimum wage.

Calculating Minimum Wage Compliance

To check compliance:

1. Identify the pay reference period (usually weekly or monthly)
2. Calculate total pay (only items that count)
3. Calculate total hours worked (including training, travelling time in some cases)
4. Divide pay by hours
5. Compare to the appropriate rate for the worker's age

Common Minimum Wage Errors

1. Unpaid Training

Time spent on compulsory training counts as working time and must be paid.

2. Unpaid Travel Time

Travel between work locations during the working day must be paid.

3. Uniform Costs

If workers must buy a uniform and it takes them below minimum wage, you must pay more.

4. Deductions

Deductions that take pay below minimum wage are unlawful (except court orders, tax, and NI).

5. Wrong Age Band

Check workers' ages regularly - they may move to a higher rate mid-year.

Penalties for Non-Compliance

Getting minimum wage wrong can be expensive:

Penalty	Amount
Arrears	Must repay all underpayment
Penalty	Up to 200% of arrears (max £20,000 per worker)
Naming	Published on government "name and shame" list
Criminal	Deliberate non-payment is a criminal offence

How HMRC Enforces Minimum Wage

HMRC can:

• Respond to worker complaints
• Conduct targeted enforcement
• Carry out random inspections
• Issue notices of underpayment
• Pursue criminal prosecution

Key Dates for Employers

Date	Action
April each year	New rates come into force
Worker birthdays	Check if they've moved age band
Annually	Review pay rates against minimum wage
When hiring	Check correct rate from day one

Best Practice

1. Audit regularly - Check all workers are above minimum wage
2. Track hours carefully - Including training and travel
3. Review deductions - Ensure they don't take pay below minimum
4. Update systems - Before April rate changes
5. Check apprentices - Move to correct rate after year one
6. Document everything - Keep records for 6 years