Published: 30 October 2026

The UK Government has announced a 3.9% increase in the National Living Wage and National Minimum Wage, raising the hourly rate for eligible workers aged 21 and over from £12.71 to £13.20.

The announcement was made by Chancellor John Healey as part of the Government’s Budget plans. The increase is expected to benefit approximately 2.3 million of the lowest-paid workers across the UK.

The Chancellor said the increase was intended to support working people while helping businesses and the wider economy.

The Budget also highlighted the Government’s priorities of supporting businesses, encouraging innovation and economic growth, and addressing major challenges involving energy, national security, public services and housing.

National Living Wage Increase 2026: What Is Changing?

The announced 3.9% increase will raise the hourly National Living Wage rate for eligible workers aged 21 and over.

This means eligible workers will receive an additional 49p for every hour worked.

For someone working 37.5 hours per week, the increase would amount to approximately £18.38 extra per week before tax, assuming the same working hours.

The revised rate is intended to help low-paid workers manage living costs while supporting the Government’s wider employment and economic objectives.

National Living Wage vs National Minimum Wage

The terms National Living Wage and National Minimum Wage are sometimes used interchangeably, but they refer to different statutory wage categories.

1. National Living Wage

The National Living Wage is the statutory minimum hourly rate employers must pay eligible workers aged 21 and over.

Employers are legally required to pay at least the applicable rate to workers covered by the rules.

2. National Minimum Wage

The National Minimum Wage is the legal minimum hourly pay for younger workers and apprentices.

The applicable rate depends on the worker’s age and apprenticeship status.

3. Real Living Wage

The Real Living Wage is different from the Government’s statutory minimum wage rates.

It is a voluntary hourly rate calculated independently according to the cost of living. Employers can choose to become accredited and commit to paying their eligible employees this higher rate.

The article reports the current Real Living Wage rates as:

• UK rate: £14.10 per hour.
• London rate: £15.45 per hour.

These rates are designed to reflect living costs, with a separate higher rate for workers in London.

What Is the Difference Between the National Living Wage and the Real Living Wage?

Although their names are similar, the National Living Wage and Real Living Wage operate differently.

The National Living Wage is a legal minimum set by the Government. Employers must pay eligible workers at least the applicable statutory rate.

The Real Living Wage, on the other hand, is a voluntary rate based on the estimated cost of living. Employers who sign up to the scheme agree to pay the relevant rate to eligible workers.

The main difference is that the National Living Wage is legally enforceable, while the Real Living Wage depends on an employer’s voluntary commitment.

Who Is Eligible for the Real Living Wage?

The Real Living Wage is a voluntary employer commitment that applies to workers aged 18 and over.

According to the Living Wage campaign, almost 17,000 employers, including organisations such as IKEA, KPMG and LUSH, have signed up to pay the independently calculated rate.

The campaign estimates that the scheme helps hundreds of thousands of workers receive higher pay.

However, workers do not automatically have a legal right to receive the Real Living Wage simply because they are employed.

Their legal entitlement is generally the applicable National Minimum Wage or National Living Wage rate, unless their employer has committed to paying the Real Living Wage or their employment contract provides for a higher amount.

What Does the 2026 Wage Increase Mean for Workers?

The increase from £12.71 to £13.20 per hour means eligible workers will receive more for every hour they work.

The additional income may help workers manage everyday expenses, including:

• Food and household shopping.
• Rent and accommodation costs.
• Energy and utility bills.
• Transport expenses.
• Other essential living costs.

However, the actual benefit will depend on the number of hours worked, individual tax circumstances and other deductions.

For employers, the increase will also mean higher wage costs, particularly for businesses that employ large numbers of workers on or close to the statutory minimum.

Final Thoughts

The announced 2026 National Living Wage increase represents a 3.9% rise for eligible workers aged 21 and over, taking the hourly rate from £12.71 to £13.20.

While the increase will provide additional earnings for millions of workers, it is important to understand the difference between the Government’s statutory minimum wage and the independently calculated Real Living Wage.

Workers should check their payslips and employment contracts to ensure they receive at least the correct legal minimum for their age and employment status.

Disclaimer: This article is for general information. Wage rates and eligibility should be checked against official UK Government guidance and the relevant Living Wage Foundation information.

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