Minimum wage in the UK explained
Almost every worker in the UK is entitled to the National Minimum Wage (NMW), and some employees are also eligible for the higher rate National Living Wage (NLW). In this article, you’ll learn what the minimum wage is, and how it affects workers depending on their age. We also include advice on how to save money while earning the minimum wage and how to find a competitive savings account that works for you.
Legal entitlement: Employers are legally required to pay their workers the minimum wage. Those that don’t will be fined and may be taken to court.
Age variations: The amount you’re entitled to receive depends on your age and whether you’re an apprentice.
Yearly review: The government asks the Low Pay Commission to review the NMW and NLW rates every year. The new rates take effect from 1 April.
What is the minimum wage in the UK?
The National Minimum Wage (NMW) is the minimum wage per hour a worker is entitled to earn in the UK by law. The minimum wage you receive depends on your age, and once you reach the age of 21, you’ll be paid at least the National Living Wage, which is slightly higher.
How does minimum wage work?
The hourly rate a worker receives is determined by both their age and whether or not that worker is an apprentice. You’re only entitled to the NMW if you’re of school leaving age, which is 16. Minimum wage regulations apply to all workers aged 21 and under.
It’s worth noting that some parts of your pay don’t count towards your minimum wage. This includes tips, overtime payments, a loan from your employer, or a pay advance. Commission, on the other hand, is included.
An employer can take certain deductions from your pay, but only for things such as tax and national insurance contributions, pension payments, trade union fees and any charges for accommodation they provide. If you have a student loan and meet the repayment threshold, this is also taken out of your salary if you’re employed.
How is the minimum wage decided?
The government sets the minimum wage rates, applying them to all employees. This includes those who work full-time, part-time, in a small start-up business and those completing essential training for their job. You can check if you’re getting the minimum wage by using the government’s National Minimum Wage calculator. If you think you’re not getting paid enough, you can also find out what your employer owes you.
The current rates for NLW and NMW are as follows:
Your age | Entitled wage | Current hourly rate |
|---|---|---|
21 and over | National Living Wage | £11.44 |
18 to 20 | National Minimum Wage | £8.60 |
Under 18 | National Minimum Wage | £6.40 |
Apprentice (aged under 19, or aged 19 or over and in the first year of their apprenticeship) | National Minimum Wage | £6.40 |
Will the minimum wage increase soon?
Yes, from 1 April 2025, the rates will change to:
Your age | Entitled wage | Hourly rate |
|---|---|---|
21 and over | National Living Wage | £12.21 |
18 to 20 | National Minimum Wage | £10.00 |
Under 18 | National Minimum Wage | £7.55 |
Apprentice (aged under 19, or aged 19 or over and in the first year of their apprenticeship) | National Minimum Wage | £7.55 |
Are you taxed if you earn minimum wage?
You might still be taxed on your income even if you earn minimum wage, with different thresholds applicable based on how much you earn.
You won’t pay any income tax on earnings of up to £12,570 per year. Anything you earn between £12,570 and £50,270 will be taxed at 20%.
If you’re on a zero hour or casual contract, you should still receive the minimum wage.
How does the UK’s minimum wage vary depending on age?
A varying scale of minimum wage exists so that more people of various ages and experience levels can find employment. This was put in place by the government in light of evidence that younger workers were being priced out of jobs.
While younger workers usually receive lower wages than older workers, a couple of reasons for that might be because they often lack the experience and have a higher training cost than older and more experienced employees.
Overall, the aim of minimum wage is to ensure a higher percentage of employment for younger people.
What is the National Living Wage?
The National Living Wage (NLW) is paid to workers in the UK aged 21 and over. As of April 2024, this is £11.44 an hour.
How to save money on the minimum wage
If you’re earning the minimum wage or receiving a modest income, saving money can be challenging. However, you can make your money go further through a combination of budgeting, planning and careful spending.
Our website contains lots of ideas and financial inspiration to help you save money and keep more of what you earn. From budgeting advice to clever money-saving hacks, we’ll show you how it might still be possible to save money from your salary even if you’re on the minimum wage.
Start saving with Raisin UK
If you then find you’re able to save some of your wages, you could consider opening a savings account that would allow you to plan for your future and meet your savings goals. You’ll find a range of competitive savings accounts in our online marketplace including easy access savings accounts, notice accounts and fixed rate bonds.
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