Chancellor’s Announcement: Minimum Wage Increase 2025 and Key Changes Explained

The Chancellor of the Exchequer, Rachel Reeves, has announced substantial increases in the Minimum Wage rates, to take effect from April 1, 2025. This announcement was made on the eve of the Budget, and confirms that the government has accepted the full recommendations of the Low Pay Commission (LPC). These changes aim to address the rising cost of living and ensure fairer wages for workers across the country.

National Living Wage Increase to £12.21 per Hour

The National Living Wage (NLW) will rise from £11.44 to £12.21 per hour starting April 1, 2025—an increase of 6.7%, equivalent to 77 pence per hour. This rate applies to workers aged 21 and over, meaning a full-time employee on the NLW will see an annual pay rise of more than £1,400. This adjustment reflects the government’s efforts to ensure that wages keep pace with the cost of living, providing much-needed financial relief to millions of workers.

Record Increase for National Minimum Wage for Younger Workers

In addition, the National Minimum Wage (NMW) for workers aged 18 to 20 will increase from £8.60 to £10.00 per hour—an impressive 16.3% increase, the largest in the NMW’s history. This raise is expected to boost younger workers’ earnings by up to £2,500 annually, helping narrow the pay gap between younger employees and those on the National Living Wage. This move is part of a broader strategy to create a single wage rate for all adults aged 18 and over in the future.

Increases for Younger Workers and Apprentices

Workers aged 16 to 17 will also see a substantial pay increase, with the hourly rate rising from £6.40 to £7.55 per hour—an 18% increase. The Apprentice Rate will similarly increase, in line with the LPC’s earlier recommendations. These changes demonstrate a strong commitment to supporting younger workers and apprentices by providing better financial opportunities.

These upcoming increases in the minimum wage rates are set to significantly improve the financial well-being of many workers across the UK. Employers should prepare for these changes to ensure compliance, while employees can look forward to enhanced income and improved living standards.

For more details on the upcoming minimum wage adjustments, visit the Low Pay Commission’s website.

Need more information or guidance? Contact us to learn more about how these changes might affect your business or employment status.