National Living Wage April 2026: The New Rates, Who They Apply To, and What HMRC Does When You Get It Wrong

The rate went up on the 1st of April. Not the 6th — the 1st. Different date from the PAYE changes. A deliberate scheduling collision that has caught payroll managers out before and will catch more of them out again.

The National Living Wage from 1 April 2026 is £12.71 per hour for workers aged 21 and over. The full set of rates has moved. And HMRC has a list — a public list, updated regularly, sitting on GOV.UK — of employers who paid less than they were required to. Names, amounts owed, companies identified. The reputational consequence is permanent.

Underpaying the National Minimum Wage is not a compliance issue. It is a criminal offence. The distinction matters. Compliance issues get warning letters and improvement notices. Criminal offences get prosecution, penalty notices, and a place on that list.

The New Rates From 1 April 2026

Every age band has moved.

21 and over — National Living Wage: £12.71 per hour (up from £12.21)

18 to 20: £10.85 per hour (up from £10.00) — a significant jump. An 85p increase per hour on an 18-year-old working 30 hours is an additional £1,326 per year. If you employ young workers in volume — retail, hospitality, call centres — this is a meaningful payroll cost increase.

16 to 17: £8.00 per hour (up from £7.55)

Apprentices under 19, or in first year of apprenticeship: £8.00 per hour (up from £7.55)

The implementation date is 1 April, not 6 April. Workers aged 21 and over should have been receiving £12.71 from the first pay period beginning on or after 1 April. If your payroll runs the first week of April and you didn't update the rates, you underpaid — and the amount accumulates per hour, per worker, from that date.

The Trap With Salary Workers

Hourly-paid workers are straightforward. You update the rate, you recalculate. Done.

Salaried workers are where the minimum wage compliance failures hide.

A salaried worker on £26,000 per year looks fine against the NLW. Divide by 52 weeks, divide by the contracted 40 hours: £12.50 per hour. Below £12.71 per hour from April 2026.

The calculation uses actual hours worked, not contracted hours. A salaried manager who regularly works 50 hours — attends early briefings, stays late for service, answers the Sunday phone calls that aren't technically required but functionally are — is working more hours than their salary assumes. Divide £26,000 by 50 hours by 52 weeks: £10.00 per hour. Significantly below the NLW.

HMRC's compliance checks on minimum wage underpayment routinely identify salaried workers in exactly this position. The employer didn't intend to underpay. They didn't notice the effective rate had fallen below the threshold. HMRC does not accept intent as a defence.

Tips Cannot Count

The Employment (Allocation of Tips) Act 2023 settled this permanently. Tips, service charges, and gratuities paid to workers cannot be used to make up the National Minimum Wage. Basic pay must hit the threshold independently.

This is significant for hospitality. A front-of-house worker on £11.50 per hour who receives £2.00 per hour in allocated tips is not on £13.50 per hour for minimum wage purposes. They are on £11.50 per hour — below the NLW from April 2026 — and the employer is underpaying.

Some hospitality operators built pay structures around tips filling the gap between a lower base rate and the legal minimum. That structure was always uncertain. From April 2026 it is unambiguously wrong.

The HMRC Enforcement Machine

HMRC's National Minimum Wage enforcement team operates a dedicated compliance function. Referrals come from workers, trade unions, ACAS, and internal HMRC data matching. Compliance checks are conducted by post, telephone, and in-person inspection.

When HMRC identifies underpayment, the consequences stack:

Notice of Underpayment — requires the employer to pay every underpaid worker the full arrears going back six years. The arrears are calculated at current rates, not the rates that applied when the underpayment occurred. This means old underpayments become more expensive as minimum wage rates increase.

Financial penalty — 200% of the arrears amount, up to a maximum of £20,000 per worker. On a workforce of twenty underpaid hospitality workers each owed £1,500 in arrears, the penalty is £3,000 per worker — £60,000 total.

Naming and shaming — HMRC publishes a list of non-compliant employers on GOV.UK. The list includes the employer's name, the total underpayment amount, the number of workers affected, and a brief description of the breach. It sits there indefinitely. It appears in Google searches. It appears in due diligence checks. It appears when the business is sold.

What Changes on Your Payroll From April 2026

Every worker aged 21 or over must receive at least £12.71 per hour from the first pay period beginning on or after 1 April 2026. Every worker aged 18 to 20 must receive at least £10.85. Every worker aged 16 to 17, and eligible apprentices, must receive at least £8.00.

The checklist:

• Hourly rates updated in payroll software for all relevant age bands
• Salaried workers' effective hourly rate recalculated against new NLW
• Any tips or service charges removed from NLW compliance calculations
• Apprentice rates reviewed against age and apprenticeship year
• Annual pay review scheduled to run ahead of April each year going forward

If you missed the 1 April implementation, the arrears are already running. The correction is to recalculate, pay the difference, and update from this point forward. Doing it voluntarily is significantly less expensive than doing it after HMRC has asked.

bookd. updates payroll rates for all statutory changes as part of the managed payroll service. The April 2026 NLW increase was applied to every managed payroll on the correct implementation date. If your payroll is handled in-house or by a bureau that hasn't confirmed the update, the effective hourly rate for your lowest-paid workers is worth checking today.