UPDATE ON NMW & NLW – AUGUST 2025 DEVELOPMENTS

ASESA Solutions Ltd - UPDATE ON NMW & NLW – AUGUST 2025 DEVELOPMENTS

The National Minimum Wage (NMW) and National Living Wage (NLW) are statutory hourly pay rates set by the UK Government to ensure fair pay for workers. The NMW applies to workers under 21 and apprentices, while the NLW is the higher rate for workers aged 21 and over. Both are reviewed annually, based on recommendations from the Low Pay Commission (LPC).

On 5 August 2025, the Government published two key updates outlining its approach to wage rates for April 2026 onwards:

1. Low Pay Commission Remit 2025 (Policy Paper)

The Government has formally asked the LPC to recommend new minimum and living wage rates to apply from 1 April 2026.The remit emphasises the Government’s commitment to ensuring that the NLW remains at least two-thirds of UK median hourly earnings, a recognised benchmark for tackling low pay.

The LPC has also been asked to:

• Review and recommend new rates for 18–20-year-olds, under-18s, and apprentices.

• Consult on removing age bands for adults to reduce pay disparities.

• Review the accommodation offset rate applicable from April 2026.

The LPC will submit its advice to the Government by the end of October 2025, after which the confirmed rates will be announced.

2. National Living Wage Estimate Update (LPC News Release)

In its latest update, the LPC has projected that the National Living Wage required to maintain the two-thirds median earnings target will likely range between £12.55 and £12.86 per hour, with a central estimate of £12.71 — representing an increase of about 4.1% on the April 2025 rate of £12.21.

These figures are indicative, not final, and will be refined once the LPC reviews economic and labour market conditions later this year.

Next Steps

Final recommendations are due by October 2025, with the new statutory rates to take effect from 1 April 2026. Employers should monitor updates from the Government and the LPC to prepare for the forthcoming changes.