From 1 April 2025, the National Living Wage rises to £12.21 per hour — a 6.7% increase on the previous rate. For full-time workers, that's an extra £1,400 a year before tax.
Here's every updated rate, who qualifies, and what the rise means for your take-home pay. For a full breakdown of how your pay is taxed, see our how to read your payslip guide. For how salary sacrifice can improve your take-home, see our salary sacrifice explained guide.
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2025/26 minimum wage rates
| Category | Rate from April 2025 | Previous rate |
|---|---|---|
| National Living Wage (21+) | £12.21/hr | £11.44/hr |
| 18–20 year olds | £10.00/hr | £8.60/hr |
| 16–17 year olds | £7.55/hr | £6.40/hr |
| Apprentices | £7.55/hr | £6.40/hr |
The National Living Wage was extended to workers aged 21 and over in April 2024 (previously 23+). All workers aged 21+ are now entitled to the top rate.
What does £12.21/hr mean annually?
| Hourly rate | £12.21 |
| Hours per week (full-time) | 37.5 |
| Annual gross salary | £23,810 |
| Income tax (20%) | −£2,248 |
| National Insurance (8%) | −£899 |
| Estimated take-home | ~£20,663 |
How the rise affects salary sacrifice
If you're on or near the minimum wage, salary sacrifice has an important limit: your salary after sacrifice cannot fall below the National Minimum Wage.
With the NLW rising to £12.21, the floor rises too — meaning workers on the minimum wage have less headroom for salary sacrifice than higher earners.
If you're currently sacrificing salary and receive a pay rise to the new NLW rate, check that your sacrifice amount still keeps you above the minimum wage floor. Your employer's payroll team should flag this, but it's worth verifying.
Employer NI impact
The April 2025 employer NI changes compound the cost of the NLW rise for employers:
- Employer NI rate rises from 13.8% to 15%
- Secondary threshold drops from £9,100 to £5,000
For a full-time NLW worker, the combined cost increase (higher wages + higher NI) is significant. This is driving many employers to look more closely at salary sacrifice schemes to offset their NI bill.
Does the NLW rise push you into a higher tax band?
For most NLW workers, the answer is no — £23,810 is well within the basic rate band. But it's worth checking:
| Situation | Check |
|---|---|
| Multiple jobs | Combined income may exceed £12,570 Personal Allowance |
| Part-time + benefits | Universal Credit taper may reduce net gain |
| Student loan repayments | Plan 1 threshold is £24,990 — NLW workers are just below it |
If you're on Plan 2 or Plan 5 student loans, the repayment threshold is £27,295 and £25,000 respectively. A NLW salary of £23,810 is below both — so no repayments are triggered.
Apprentice rate — biggest percentage rise
Apprentices and 16–17 year olds see the largest percentage increase: from £6.40 to £7.55/hr — an 18% rise. This is part of a government commitment to close the gap between apprentice rates and adult rates over time.
What to do if you've just received a pay rise to the new NLW
- Check your tax code — a pay rise can change your PAYE position
- Review your pension contributions — even a small increase in sacrifice has a bigger impact now
- Check student loan thresholds — if your salary is approaching a repayment threshold, model the impact
- Universal Credit claimants — report the pay change to avoid overpayments
What this means for you
If you are a full-time worker on the new £12.21/hr rate, your gross annual salary is around £23,810 and your take-home is approximately £20,663. A 5% pension sacrifice (£1,190/year) costs you around £858 in take-home pay and saves £332 in tax and NI.
If you are an employer, the combined impact of the higher NLW and the employer NI changes means salary sacrifice schemes are now more financially attractive than before — every pound of salary sacrifice reduces your NI bill at the new 15% rate.
For workers near the minimum wage, the key check is that any existing salary sacrifice does not push post-sacrifice pay below the new £12.21 floor.
Try the TaxCal UK calculator to estimate your take-home pay.
Summary
- National Living Wage rises to £12.21/hr from April 2025 (6.7% increase)
- All workers aged 21+ qualify — the age threshold was lowered to 21 in April 2024
- Full-time NLW workers earn ~£23,810/year gross, ~£20,663 take-home
- Salary sacrifice cannot reduce pay below the NLW floor
- Employer NI rises compound the cost for employers — making salary sacrifice more attractive
FAQ
Does the National Living Wage apply to part-time workers?
Yes. The NLW is an hourly rate and applies to all workers aged 21 and over regardless of hours worked.
Can salary sacrifice reduce pay below the NLW?
No. Your post-sacrifice salary cannot fall below the National Living Wage. Employers must ensure sacrifice arrangements respect this floor.
Does the NLW rise affect my tax code?
Not directly. But if your salary increases, more of it may become taxable if the Personal Allowance stays frozen. Check your tax code at the start of each tax year.
Are apprentices entitled to the full NLW rate?
No. Apprentices under 19, or in the first year of their apprenticeship, receive the apprentice rate (£7.55/hr from April 2025). After that, the standard age-based rate applies.
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