UK Minimum Wage 2025: Rates & What You Earn

UK Minimum Wage Rates from April 2025

The UK government uprated all minimum wage rates from 1 April 2025, with the most significant increase going to the National Living Wage (NLW) which rose to £12.21 per hour for workers aged 21 and over. This represents an increase of 6.7% from the previous rate of £11.44/hr, well above general inflation and continuing the government's stated goal of keeping the NLW at a level equivalent to two-thirds of median UK earnings.

The uprating affects more than 1.6 million workers who are paid at or close to the minimum wage, making it one of the most significant annual pay rises for low-income workers. Sectors most affected include retail, hospitality, social care, cleaning and domestic services, and agricultural work.

The particularly large increases for the 18–20 and under-18 age bands reflect the government's longer-term aim of converging the youth rates with the adult National Living Wage. The gap between the youth rate (£10.00) and the NLW (£12.21) has narrowed significantly compared to previous years, with the 18–20 rate rising by 16.3% — more than double the rate of general wage growth.

Annual Salary on Minimum Wage 2025

While the hourly rate provides the legal benchmark, most workers and employers think in terms of weekly or annual pay. The table below shows estimated annual gross earnings at each minimum wage rate, based on common working-hour patterns.

The standard working week in the UK is typically considered to be 37.5 hours. A full-time minimum wage worker on 37.5 hours earns a gross annual salary of £23,810. This is below the UK median annual salary of £37,430, illustrating the significant gap between minimum wage work and the typical earnings of the UK workforce.

Take-Home Pay After Tax on Minimum Wage

Gross salary is the headline figure, but what matters to workers is take-home pay after income tax and National Insurance contributions. The table below shows estimated net monthly and annual take-home pay for a full-time worker (37.5 hrs/week) on each minimum wage rate in the 2025/26 tax year, assuming no pension contributions, student loan, or other deductions.

A full-time National Living Wage worker takes home approximately £1,710 per month after tax and NI. This compares to an average UK monthly take-home pay of around £2,400–£2,600 for workers on the median salary. For context, the average monthly rental cost outside London was approximately £1,285 in early 2025, meaning many minimum wage workers face significant housing affordability challenges.

National Living Wage vs Real Living Wage

The National Living Wage (£12.21/hr) is a legal minimum set by the government and enforced by HMRC. The Real Living Wage is a separate, higher figure calculated annually by the Living Wage Foundation based on the actual cost of living in the UK — including food, rent, transport, clothing, and social participation.

The gap between the statutory NLW and the Real Living Wage has narrowed considerably in recent years as the government has raised minimum rates aggressively. Outside London, the gap is now just £0.39/hr — representing around £760 per year for a full-time worker. In London, the gap is more significant at £1.64/hr (approximately £3,200/year), reflecting the substantially higher cost of living in the capital.

Around 15,000 UK employers voluntarily pay the Real Living Wage and display the Living Wage Foundation's accreditation mark. These include major retailers, banks, universities, and public sector organisations. Research by the Living Wage Foundation suggests employers who pay the Real Living Wage report lower staff turnover, improved morale, and reduced absenteeism.

Minimum Wage by Sector: Who Is Most Affected?

The minimum wage does not affect all industries equally. Sectors with a large proportion of low-paid workers see the most significant impact from annual uprating. The following sectors employ the highest share of workers at or near the minimum wage:

The hospitality sector is particularly exposed to minimum wage changes. With very thin profit margins, a 6.7% rise in the NLW represents a significant cost pressure. Many hospitality businesses report having to increase menu prices, reduce hours, or limit new hires in response to minimum wage upratings. The British Hospitality Association estimates that labour costs represent approximately 35–40% of total operating costs for food and beverage businesses.

Minimum Wage History: How Rates Have Changed

The UK introduced the National Minimum Wage in 1999 at an initial rate of £3.60/hr for workers aged 22 and over. The National Living Wage was introduced in April 2016 for workers aged 25 and over at £7.20/hr. The qualifying age was reduced to 23 in 2021 and to 21 in April 2024, broadening the reach of the higher rate significantly.

Since the introduction of the National Living Wage in 2016, the adult rate has risen by 69.6% — from £7.20 to £12.21. Over the same period, CPI inflation was approximately 45%, meaning the NLW has risen in real terms, delivering a genuine improvement in the living standards of the lowest-paid workers. The most dramatic year-on-year increases occurred between 2022 and 2024, during and immediately after the cost-of-living crisis.

Your Rights as a Minimum Wage Worker

All workers who are entitled to the National Minimum Wage or National Living Wage have legal rights that cannot be waived, regardless of any agreement with their employer. Key rights include:

• Right to receive the correct rate: Employers must pay at least the applicable minimum wage rate for every hour worked, including overtime, travel time (where required to travel), and mandatory training time.
• Right to payslips: Since 2019, all workers (not just employees) are entitled to an itemised payslip showing hours worked and pay rate.
• Right to keep tips: Since October 2024, the Employment (Allocation of Tips) Act requires employers to pass 100% of tips, gratuities, and service charges to workers and prohibits the use of tips to top up minimum wage pay.
• Right to report underpayment: Workers can contact ACAS (0300 123 1100) or HMRC's National Minimum Wage Helpline to report suspected underpayment anonymously.
• Deductions from pay: Most employer-required deductions (e.g., for uniforms, tools, or accommodation above the offset rate) are illegal if they bring pay below the minimum wage threshold.
• Zero-hours contracts: Workers on zero-hours contracts are still entitled to the applicable minimum wage for every hour worked.

Accommodation Offset

Employers who provide accommodation to workers can make a charge (or deduction) against wages, but only up to the maximum Accommodation Offset of £10.66 per day from April 2025 (equivalent to £74.62 per week). Any charge above this amount counts as a deduction that reduces the effective hourly rate, potentially bringing it below the minimum wage threshold and making the employer liable for prosecution.

Minimum Wage and Auto-Enrolment Pensions

Workers earning above the auto-enrolment earnings trigger (£10,000 per year in 2025/26) are automatically enrolled into a workplace pension scheme. For a full-time minimum wage worker on £23,810 per year, this means:

• Minimum employee pension contribution: 5% of qualifying earnings (earnings between £6,240 and £50,270)
• Minimum employer contribution: 3% of qualifying earnings
• Qualifying earnings for a NLW worker: approximately £17,570 (£23,810 - £6,240)
• Annual employee pension contribution: approximately £879
• Annual employer contribution: approximately £527

It is important to note that pension contributions reduce take-home pay further below the figures in the table above. A full-time NLW worker contributing 5% to their pension would receive a net take-home pay of approximately £1,637/month rather than £1,710, but would be building valuable retirement savings. Workers who cannot afford the deduction can opt out of auto-enrolment, though they lose the employer contribution.

Frequently Asked Questions