The national living wage (NLW) replaces the current national minimum wage (NMW) of £6.70 per hour for people over the age of 25.

Employers now have to pay workers over the age of 25 at least £7.20 per hour.

Individuals between the age of 21 and 24 won’t be affected by this change. All other NMW wage rates and bands remain the same until October 2016.

Here are the national living and minimum wage hourly rates:


Hourly rate until October 2016 Hourly rate from October 2016
25 and over £7.20 £7.20
21 – 24 year old rate £6.70 £6.95
18 – 20 year old rate £5.30 £5.55
16 – 17 year old rate £3.87 £4.00
Apprentice rate* £3.30 £3.40
*For apprentices aged 16 – 18 or those 19 or over in their first year.

NMW calculations don’t just involve an hourly rate. Employers will also have to include:

income tax and national insurance contributions (NICs)
wage loans or advances
overpaid wages
any accommodation provided by the employer.
Employers are responsible for identifying eligible workers and paying the NLW and face penalties if they fail to comply.

HMRC charges 200% of arrears for failing to pay the NLW or the NMW up to a maximum of £20,000 per worker. Penalties are halved if the employer pays within 14 days.

For help or advice, please contact a member of the team on 0161 761 5231 or email