Reeves confirms £1,500 minimum pay increase for UK workers
Chancellor Rachel Reeves has confirmed that the National Minimum Wage will increase by 8.5% from 1 April 2026, resulting in a pay increase of £1,500 per year for qualifying workers.
In a statement published on Wednesday 3 December, Reeves confirmed the increases to the National Minimum Wage and National Living Wage that she had previously announced in her Autumn Budget statement.
The National Minimum Wage applies to UK workers aged from 18 to 20 years old, while the National Living Wage applies to workers aged 21 and over.
From April 2026, the National Minimum Wage will rise to £10.85 per hour, which narrows the gap to the National Living Wage. This will deliver an annual earnings increase of £1,500 for a full-time worker and move closer to the goal of establishing a single adult rate for minimum pay.
The National Living Wage will increase by 4.1% to £12.71 per hour, meaning an increase in gross annual earnings for full-time workers of £900. The increase in National Living Wage will benefit around 2.4 million workers in the United Kingdom.
Reeves said that in defining these new minimum pay packages, the government has sought expert advice to strike the right balance between the needs of workers and the affordability for businesses.
“I know that the cost of living is still the number one issue for working people and that the economy isn’t working well enough for those on the lowest incomes. Too many people are still struggling to make ends meet, and that has to change,” Reeves said.
“That’s why today I’m announcing that we will raise the National Living Wage and also the National Minimum Wage, so that those on low incomes are properly rewarded for their hard work.”
“For a full-time worker on the National Living Wage, that means an increase in pay of £900 a year. And for someone on the National Minimum Wage, working full time, it will mean a £1,500 increase,” she said.
Cost of living bites into household budgets
Low- and middle-income families in the UK are under financial pressure, with recent data showing that 60% have seen their spending power fall for a fourth consecutive month.
According to data from Asda, approximately 20% of all households, typically earning £11,000 or less, have a £74 shortfall each week, leaving them unable to cover essential bills.
Those earning about £25,000 a year had only £10 left after essentials, while those on £41,000 had just £90 remaining.
Data shows that earnings growth for these households continue to lag behind rising essential costs and higher tax payments.
