21 Feb National Minimum Wage & Changes Coming from April 2026
If you employ staff, you've probably heard the news: National Minimum Wage rates are going up from 1st April 2026. And while pay rises are great for your team, they also mean you need to get your payroll sorted, fast.
The good news? These changes apply to almost all workers, so you're definitely not alone in navigating this. The even better news? With a bit of prep (and the right support), staying compliant is straightforward.
Let's break down what's changing, what it means for your business, and how to make sure you're ready when April rolls around.
What Are the New National Minimum Wage Rates?
From 1st April 2026, here's what you'll need to pay your employees:
- National Living Wage (21 and over): £12.71 per hour (up from £12.21)
- 18-20 year olds: £10.85 per hour (up from £10.00)
- 16-17 year olds: £8.00 per hour (up from £7.55)
- Apprentices: £8.00 per hour (up from £7.55)
- Accommodation offset: £11.10 per day (up from £10.66)
The biggest jump? That's the 18-20 age bracket, which sees an 8.5% increase. The National Living Wage gets a 4.1% bump, which might sound modest, but it all adds up when you're running payroll for multiple employees.
Who Do These Rates Apply To?
Almost everyone. The National Minimum Wage applies to workers, employees, agency staff, and even some casual workers. It doesn't matter if someone's part-time, full-time, or working irregular hours, if they're on your payroll, you need to pay them at least the minimum wage for their age bracket.
A quick note on apprentices: If your apprentice is under 19, or if they're 19 or over but in their first year of apprenticeship, they get the apprentice rate of £8.00. Once they finish that first year and turn 19, they move up to the standard age-based rate.
And yes, the accommodation offset matters too. If you provide accommodation as part of the job, you can only offset a maximum of £11.10 per day against the minimum wage. Charge more than that, and you need to make sure their cash wages still meet the minimum.
What Does This Mean for Small Businesses?
Let's be honest: wage increases mean higher payroll costs. If you've got a team of five, ten, or twenty people, those extra 50p or 85p per hour add up quickly over the course of a year.
But here's the thing, this is a legal requirement, not optional. Paying below the minimum wage isn't just bad practice; it's illegal. HMRC takes non-compliance seriously, and the penalties can sting.
So what can you do?
1. Budget for the increase now
If you haven't already, run the numbers. Work out what the new rates will cost you per employee, per month, and adjust your budgets accordingly. It's much easier to plan ahead than to scramble at the last minute.
2. Review your pricing or margins
Some businesses absorb the cost. Others adjust their pricing or look at efficiency improvements. There's no one-size-fits-all answer, but it's worth reviewing whether your current pricing still works.
3. Update your payroll system
This is where things can get fiddly. You need to make sure your payroll system reflects the new rates from 1st April onwards. Miss this, and you could underpay staff, or worse, face an HMRC investigation.
The Penalties for Getting It Wrong
HMRC doesn't mess about when it comes to National Minimum Wage compliance. If you underpay an employee, even by accident, you could face:
- Arrears payments: You'll need to pay back what's owed, often going back several years.
- Financial penalties: Up to 200% of the underpayment (capped at £20,000 per worker).
- Public naming: HMRC publishes a list of employers who fail to pay the minimum wage. Not great for your reputation.
- Criminal prosecution: In extreme cases, yes, it can go that far.
Even honest mistakes can land you in hot water. Maybe you miscalculated hours, forgot to include a bonus in the calculation, or didn't account for uniform deductions properly. HMRC won't always see it as an innocent error.
The solution? Get your payroll right from the start.
How to Prepare for the April 2026 Changes
You've got a bit of time, but not loads. Here's what you should be doing now:
Update your payroll software
If you're using payroll software (like Xero, which we're big fans of), make sure it's updated to reflect the new rates. Most platforms release updates automatically, but it's worth double-checking.
Communicate with your team
Your employees will want to know what the changes mean for them. A quick email or team meeting can clear up any questions and show you're on top of things.
Review your contracts and job offers
If you've got contracts that reference specific hourly rates, make sure they'll still be compliant after 1st April. Any new hires starting after that date need to be offered the updated rates from day one.
Check your record-keeping
HMRC can ask to see payroll records going back several years. Make sure you've got clear documentation of hours worked, wages paid, and any deductions. This isn't just good practice: it's a legal requirement.
Let Your Payroll Bureau Handle It
Here's the reality: payroll is one of those things that's easy to get wrong and expensive to fix. Rates change, rules evolve, and one small mistake can snowball into a compliance headache.
That's exactly why we offer a full payroll bureau service at Harrison's Accountancy. We handle all the updates, calculations, and submissions for you: so you don't have to worry about whether you've got the new National Minimum Wage rates right, or whether your RTI submissions are compliant.
What does our payroll bureau service include?
- Calculating wages, tax, and National Insurance contributions
- Processing automatic updates for rate changes (like the April 2026 increases)
- Handling RTI submissions to HMRC
- Managing pension auto-enrolment
- Providing payslips for your team
- Keeping you compliant with all the latest regulations
And because we're Xero accountants, everything integrates seamlessly. Your payroll data feeds directly into your accounting system, so you've always got a clear picture of your costs without double-entry or manual uploads.
Why Work with a Small Business Accountant Who Gets It
Running a small business is hectic. Between managing clients, keeping operations running, and trying to grow, payroll compliance probably isn't top of your priority list. But it should be on someone's list: and that's where we come in.
At Harrison's Accountancy, we work with small Ltd companies, sole traders, and SMEs across Bedfordshire and beyond. We know what it's like to juggle a million things at once, and we're here to take payroll off your plate so you can focus on what you actually enjoy doing.
Whether you're a media production company with freelance contractors, a consulting firm with a handful of employees, or a growing business that's just taken on its first team member, we've got you covered.
Final Thoughts: Don't Leave It Until March
April 2026 is only a few weeks away, and if you haven't sorted your payroll updates yet, now's the time. The penalties for getting National Minimum Wage wrong aren't worth the risk, and the stress of last-minute fixes definitely isn't worth it either.
If you're handling payroll yourself, make sure your systems are updated and your records are in order. If you'd rather hand it over to someone who does this day in, day out, we're here to help.
Want to chat about our payroll bureau service? Get in touch with us at Harrison's Accountancy, and let's make sure your April payroll runs like clockwork. After all, your team deserves to be paid properly: and you deserve peace of mind.
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