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Big changes to the National Living Wage in April 2021

Monday 14 December, 2020

From April 2021 there will be an increase in National Living and National Minimum Wages, the lower age threshold for the National Living Wage is being reduced to 23. Anyone under 23 will still be entitled to the relevant National Minimum Wage.

Increase in National Living and National Minimum Wages:

In addition to the lower age threshold, the National Living Wage will also increase by 2.2% from £8.72 per hour to £8.91 per hour. So for 23 and 24 year olds currently earning minimum wage, the new threshold will mean they take home 71p more per hour.

The other minimum wage rates are also set to increase from April. Based on the recommendations by the Low Pay Commission (LPC), the new hourly rates will be as follows:

  • National Living Wage: £8.91            
  • 21-22 Year Old Rate: £8.36              
  • 18-20 Year Old Rate: £6.56              
  • 16-17 Year Old Rate: £4.62              
  • Apprentice Rate: £4.30 

While many will welcome the Chancellor’s announcement, there’s no doubt that the changes will come at a challenging time for UK businesses especially with the extended Job Retention Scheme being set to close at the end of March 2021. This will mean that employers bringing back minimum wage staff from furlough will need to update their payrolls to make sure workers still receive the correct wage.