HMRC Wage increases April 2025

As of 1 April 2025, the UK’s National Minimum Wage (NMW) and National Living Wage (NLW) rates are increasing. These changes affect businesses across all sectors, making it crucial for employers to prepare in advance to ensure compliance and avoid potential penalties.

New Minimum Wage Rates from April 2025

From April 2025, the updated rates per hour are as follows:

Category	2024/2025 Rate (per hour)	2025/2026 Rate (per hour)	Increase (£)	Increase (%)
National Living Wage (21 and over)	£11.44	£12.21	£0.77	6.7%
18-20 Year Old Rate	£8.60	£10.00	£1.40	16.3%
16-17 Year Old Rate	£6.40	£7.55	£1.15	18.0%
Apprentice Rate	£6.40	£7.55	£1.15	18.0%
Accommodation Offset	£9.99	£10.66	£0.67	6.7%

Please ensure to check the latest information on HMRC website.

These increases aim to improve the standard of living for workers while ensuring businesses meet fair pay obligations.

How This Affects Employers

Employers must take several key steps to comply with the changes:

1.         Review Payroll & Budgets: Update payroll systems to reflect the new rates and assess how wage increases will impact financial planning.

2.         Check Employee Ages: Ensure that employees moving into a new age bracket are paid accordingly from April.

3.         Adjust Employment Contracts: If your contracts specify wage rates, update them to reflect the changes.

4.         Communicate with Employees: Inform staff about the changes to ensure transparency and avoid disputes.

5.         Monitor Compliance: HMRC enforces minimum wage compliance strictly. Employers found underpaying staff can face penalties of up to 200% of the underpayment (capped at £20,000 per worker).

Who is Affected?

These increases impact all employers who pay staff at the NMW or NLW rates, including businesses in retail, hospitality, care, construction, and other service industries where lower-wage roles are common.

Potential Business Implications

• Increased Operating Costs: Businesses will need to account for higher wage expenses.

• Pricing Adjustments: Some companies may need to increase prices to compensate for higher wage bills.

• Workforce Planning: Employers may review staffing levels or working hours to manage costs effectively.

Staying Compliant and Avoiding HMRC Penalties

Failure to comply with the new rates could lead to serious financial and reputational consequences. HMRC conducts audits and encourages employees to report underpayments, making it essential for businesses to stay proactive.

At Finafaze, we help SMEs, self-employed professionals, and startups stay compliant with wage regulations. Whether you need assistance with payroll processing, budgeting, or compliance checks, our expert bookkeeping team is here to support you.

For more information on how these changes affect your business or to get expert payroll support, contact us today!