# National Living Wage Rising to £13.21 From April 2027: What Employers Need to Know > The National Living Wage rises to £13.21 an hour from April 2027, a 3.9% increase. What it means for employer payroll costs and how to plan ahead. Last updated: 2026-10-31 Blog | by Rob Young | November 2026 # National Living Wage Rising to £13.21 From April 2027: What Employers Need to Know ### Rob Young Buried among the bigger Autumn Budget headlines was confirmation of next year's National Living Wage, and it's a rise worth building into your budgeting now rather than discovering it in your April payroll run. From April 2027 the National Living Wage increases by 3.9% to £13.21 an hour, with a matching rise for 18 to 20 year olds. If you employ anyone at or near these rates here's what's actually changing and what it means for your finances. ## What is the new rate and who does it apply to? The National Living Wage, the legal minimum for workers aged 21 and over, rises from its current rate to £13.21 an hour from April 2027, a 3.9% increase confirmed by the government following the Low Pay Commission's recommendation. The rate for 18 to 20 year olds rises by the same 3.9% to £11.27 an hour, continuing the gradual narrowing of the gap between the two bands that's been underway for a few years now as the government works towards a single adult rate. If you employ anyone on an apprenticeship, or anyone under 18, those rates move too, usually by a broadly similar percentage, though the exact figures are confirmed separately closer to the date. The safest approach, and the one we'd recommend to any client with hourly paid staff, is to treat every minimum wage band as moving together each April rather than assuming only the headline adult rate changes. ## What does a 3.9% rise actually cost a small employer? The percentage sounds modest next to some recent years' increases, but it compounds with everything else that moves alongside it: employer National Insurance, pension contributions calculated on qualifying earnings, and holiday pay accrual all rise in line with the hourly rate, not just the headline wage bill itself. For a business with, say, 10 staff working 30 hours a week at the current National Living Wage, a straightforward back-of-envelope calculation on the wage increase alone runs into several thousand pounds a year before you add employer National Insurance and pension costs on top. This is exactly the kind of number that's easy to underestimate because it arrives gradually through April payslips rather than as one visible bill, and it's one of the most common things we see catch employers out at year end when the actual payroll cost comes in higher than the budget they set the previous spring. Running the real numbers through your own headcount and hours, rather than relying on a rough percentage, is worth doing well before April. ## How should you actually plan for it? - Model the new rate against your actual rota or headcount now, not just the headline hourly figure, so you can see the real annual cost rather than a rough estimate. This includes updating the costs related to Employers National Insurance and Employers Pension contributions - both of which will likely have an increase with an increased salary across staff. - Check whether any pay differentials above the National Living Wage (for example, a supervisor rate set a pound or two above the legal minimum) need to move too, so the gap between roles doesn't quietly disappear. - Build the increase into any pricing or fee reviews you're planning for 2027, especially if payroll is a significant part of your cost base so the rise isn't absorbed silently into shrinking margin. - Confirm your payroll software or provider has the new rates loaded well before the first April pay run rather than assuming it updates automatically. None of this is complicated in isolation, but it's the kind of planning that's far easier done with a few months' runway than in the week before your first April payroll. Our own payroll service includes highlighting potential underpayments when rates increase like this automatically for the clients we handle payroll for, with comparison reporting that flags this month's figures against last month's so changes like this don't arrive as a surprise. ## Does anything else change alongside the wage rate? A couple of related figures are worth keeping in the same mental folder. The HMRC mileage rate for the first 10,000 business miles has been 55p per mile since 6 April 2026, up from the long-standing 45p, and this Budget made that rate permanent, with the lower rate above 10,000 miles also rising, from 25p to 35p, from 6 April 2027. So if you reimburse staff for using their own vehicles, it's worth checking your expenses process is using the current rate rather than the old one. And if wage costs are rising alongside other overheads, it's often worth reviewing fixed costs elsewhere in the business at the same time, business energy contracts being a common one we're regularly asked about. ## A quick look at the rate changes | Rate | Current | From April 2027 | Increase | | --- | --- | --- | --- | | National Living Wage (21 and over) | £12.71 | £13.21 | 3.9% (50p) | | 18-20 Year Old Rate | £10.85 | £11.27 | 3.9% (42p) | ## Frequently Asked Questions. ## When does the new National Living Wage rate start? From April 2027. The exact first pay reference period it applies to depends on your pay cycle, but the safest approach is to have the new rate loaded and ready for any pay period starting on or after 1 April 2027. ## Does the rise affect apprentice and under-18 rates too? Yes, those bands typically move alongside the headline rate each April, though the exact figures are usually confirmed separately. Treat every band as changing together rather than assuming only the adult rate moves. ## What happens if I don't update my payroll in time? Paying below the legal minimum wage, even accidentally through an out-of-date payroll system, is a compliance issue HMRC can and does enforce, including back pay and penalties. It's worth confirming your payroll software or provider has the new rates loaded well ahead of the first April pay run. ## Need a hand budgeting for next April? If you'd like us to run the real numbers through your actual headcount and rota rather than a rough percentage, get in touch via our website and we can talk it through. These meetings form part of your regular work and therefore regular fixed monthly fee if you're already a payroll client of ours, not a separate add-on. And if rising costs generally are on your mind, we can also introduce you to a trusted broker partner who reviews business gas and electricity bills for free, looking for savings. Tags: employers, employment, payroll, small business ![](https://loveyouraccountants.com/asset/2401/175-175-def/author-rob_young.png) **Author** ###### **Rob Young** Rob is Managing Director at LYA, supporting ambitious businesses to scale with confidence through clear planning and proactive financial insight. [Read more](https://loveyouraccountants.com/team-bio/rob-young) --- ### Related Blogs - [National Living Wage Rising to £13.21 From April 2027: What Employers Need to Know](https://loveyouraccountants.com/knowledge/national-living-wage-2027-employer-guide) — The National Living Wage is rising again, to £13.21 an hour from April 2027. 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