The Government has now confirmed the National Minimum and Living Wage rates for 2026.

For business owners, this isn’t just another compliance update. Wage changes feed directly into staffing costs, recruitment plans, pricing, and even how you structure your team. If you leave it until April to react, you’re already on the back foot. Planning early protects your margins and helps you hold onto the people you rely on most.

We spend a lot of time helping owner-managed businesses understand what these changes really mean in practice, not just the headline rates, but the knock-on effects and the opportunities.

Here’s what you need to know about the 2026 National Minimum and Living Wage and how to prepare.

The new NMW/NLW rates for 2026

From April 2026, the statutory wage rates will increase (as we previously announced) as follows:

Age / CategoryCurrent Rate (2025)New Rate (2026)Increase
National Living Wage (21+)£12.21£12.714.1%
18–20 years£10.18£10.604.1%
16–17 years£7.49£7.804.1%
Apprentice£6.66£6.944.2%

These increases are part of the Government’s push to lift living standards and keep wages moving with the wider market. On paper the percentages look small, but once you apply them across your whole team, the cost adds up quickly. If you’ve got a lot of staff on or near minimum wage, the impact will be noticeable.

Our advice for managing wage increases

For most businesses, even a small percentage rise in wages can create real pressure on payroll and margins. Here’s how to stay ahead of it:

1. Model your staffing costs 

  • Look at what the 2026 rates mean for your current team, including those already paid above minimum wage who may expect a knock-on increase.

  • Don’t forget part-timers, seasonal staff, and apprentices. They add up quickly if they’re missed in the forecast.

  • Include employer National Insurance and pension contributions so you’re seeing the full picture, not just the headline rates.

2. Review your team structure and productivity 

  • Identify where better systems, clearer processes, or automation could relieve some of the wage pressure.

  • Cross-train staff so you’ve got more flexibility and less dependency on specific people.

  • Consider whether you actually need more people or whether restructuring roles could give you more value for the cost.

3. Use wage increases strategically

  • Link pay progression to performance, training, or skills development so you’re rewarding the right behaviours.

  • Think about bonuses, benefits, or flexible hours to keep your best people motivated and loyal.

  • Review your apprentice and younger worker setup to stay competitive when recruiting.

4. Incorporate wage changes into pricing

  • Revisit your pricing to make sure rising staffing costs don’t erode your margins.

  • Small, incremental price changes or operational tweaks can help absorb the increases without big shocks to customers.

  • If prices need to go up, be open about it. People value honesty more than sudden unexplained increases.

Get head of 2026 wage rise

Our message to SMEs is straightforward: don’t leave this until April 2026. The earlier you plan, the easier it is to manage the impact on cashflow, margins, and your team.

Start by forecasting your wages and overheads for the next 12–24 months. When you model the numbers early, you can see the full effect of the new rates and make decisions before the pressure hits.

Businesses that think ahead tend to handle wage rises smoothly. They protect their margins, keep hold of their best people, and stay competitive in their market.

If you want help understanding what the 2026 wage changes mean for your business, our team can support you with forecasting, scenario planning, and a clear plan of action.

Book a free consultation today to make sure you’re prepared.

Email enquiries@a4g-llp.co.uk or call 01474 853 856.

Book a free consultation

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