NMW/NLW Underpayment Back-Pay Calculator 2025/26
Calculate NMW/NLW back-pay owed to you. National Living Wage £12.21/hr (age 21+), £10.00 (18-20), £7.55 (under 18). Employer HMRC penalty 100-200%. How to report.
NMW/NLW Underpayment Back-Pay Calculator
Frequently Asked Questions
What are the National Minimum Wage rates for 2025/26?
NMW/NLW rates from April 2025: National Living Wage (age 21+) £12.21/hour; Age 18-20 £10.00/hour; Under 18 and first-year apprentices £7.55/hour. These are the minimum hourly rates employers must pay. If you are an apprentice in year 2+ and aged 19+, the NLW or age-appropriate NMW applies.
How far back can I claim NMW back-pay?
You can claim NMW back-pay for the previous 6 years under the Employment Rights Act. In practice, HMRC enforces compliance going back 6 years when investigating employers. Tribunal claims must be brought within 3 months of the last underpayment (or 3 months of leaving employment). The Employment Tribunal can award unlimited back-pay.
What is the HMRC penalty for NMW underpayment?
HMRC can charge employers a financial penalty of 200% of the underpayment (minimum £100, maximum £20,000 per worker). If the employer pays the arrears within 14 days, the penalty is reduced to 100%. HMRC also names employers publicly who underpay more than £500 in arrears.
Can tips or service charges count toward NMW?
No — from October 2024, the Employment (Allocation of Tips) Act means tips must be passed to workers in full and cannot count toward NMW. This is a significant change for hospitality workers. Cash wages must meet NMW before any tips are added.
What counts as 'hours worked' for NMW purposes?
Hours worked include: actual work time, training time required by the employer, time on-call at the employer's premises, and travel time between assignments (for mobile workers). They do NOT include: genuine voluntary on-call time at home, lunch breaks where work is not required, and travel from home to a fixed place of work.
Are salary sacrifice arrangements included in NMW calculations?
The NMW is based on pay received after deductions for salary sacrifice. If salary sacrifice reduces your hourly rate below NMW, the sacrifice is not valid for the affected hours. Employers must ensure salary sacrifice arrangements never reduce pay below NMW. Pension salary sacrifice on NMW pay is particularly problematic.
What about piece work — how is NMW calculated?
For output-based work (piece rates), the NMW applies to total pay ÷ total hours worked. HMRC uses the 'mean hourly output rate' test: if your piece rate means you earn below NMW per hour overall, you are underpaid. Employers must offer a 'guaranteed output rate' of at least 120% of the mean output rate.
How do I report NMW non-compliance to HMRC?
Report via the HMRC Pay and Work Rights helpline: 0300 123 1100 (Mon-Fri 8am-6pm). You can also report online at gov.uk/pay-and-work-rights. Your report can be anonymous. HMRC will investigate and can force the employer to repay all arrears, pay a penalty, and be publicly named. There is no fee for making a complaint.