National Living Wage rate increased

The National Living Wage is increasing from 1 April 2027, and employers need to start planning for the additional cost.

For business owners, a wage increase isn’t just a change to the hourly rate. It affects payroll, pricing, recruitment and ultimately how much profit your business keeps.

The increase may look manageable when viewed as a percentage, but across a team of employees, the extra cost can quickly add up. Planning ahead gives you time to understand the impact and decide what action makes commercial sense.

At A4G, we help business owners look beyond the headline figures to understand what changes mean for their business and how to plan ahead.

What is the new National Living Wage rate for 2027?

From 1 April 2027, the National Living Wage for eligible workers aged 21 and over will increase from £12.71 to £13.21 per hour, a rise of 50p or 3.9%. The Government has also confirmed increases to the rates for younger workers and apprentices.

Age / category	Rate from April 2026	Rate from April 2027	Increase
National Living Wage, aged 21 and over	£12.71	£13.21	50p (3.9%)
Ages 18–20	£10.85	£11.27	42p (3.9%)
Ages 16–17	£8.00	£8.31	31p (3.9%)
Eligible apprentices	£8.00	£8.31	31p (3.9%)
Accommodation offset, per day	£11.10	£11.53	43p (3.9%)

These rates take effect on 1 April 2027. The National Living Wage applies to eligible workers aged 21 and over, while different minimum wage rates apply to younger workers and eligible apprentices.

For employers, the increase is about more than the hourly rate. If you employ several people on or near the National Living Wage, the additional cost can quickly add up across your workforce. You should also consider the effect on employer National Insurance, pension contributions and the pay rates of employees who already earn more than the minimum.

Understanding the full impact now gives you time to update your forecasts, review your pricing and decide how best to protect your profit margins.

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

Start by reviewing how many employees will be affected and how many hours they work.

Calculate the additional annual wage cost across your team, including any associated increases in employer National Insurance and pension contributions. Then update your cash flow forecast and budget to see how the change affects your expected profit.

Understanding the full impact now gives you more time to respond.

2. Review your productivity and staffing

Higher employment costs are a good reason to look at how efficiently your business operates.

Are your employees spending their time on the work that adds the most value? Could better systems, clearer processes, or automation help your team work more effectively?

Consider where you could reduce duplicated tasks, improve working practices or make better use of technology. The aim is to improve productivity without compromising the quality of your service or putting unnecessary pressure on your team.

3. Think about recruitment and retention

Pay is an important part of attracting and retaining good people, but it isn’t the only factor.

Consider how training, career progression, recognition and flexible working contribute to your overall employment offer. Investing in your existing team can help retain experience and reduce the cost and disruption of recruiting and training replacements.

It is worth reviewing your wider pay structure too, so that any changes are considered fairly and consistently

4. Incorporate wage changes into pricing

If your employment costs increase but your prices remain the same, your profit margins could come under pressure.

Review the cost of delivering your products or services and identify where margins may be getting tighter. You may need to consider targeted price increases, changes to how work is delivered or ways to improve efficiency.

You do not necessarily need to increase every price. The important thing is to understand which parts of your business are most affected and make decisions based on the numbers.

Don’t let rising employment costs eat into your profits

The National Living Wage increase is another cost for employers to plan for, but it doesn’t have to catch your business off guard.

Don’t wait until April to work out what it means for your bottom line. Calculate the true cost of the increase, review your pricing and identify practical steps to protect your margins.

At A4G, we help business owners understand their numbers, forecast cash flow and make informed decisions about the future of their business.

Speak to your A4G Principal Adviser or get in touch with our team to discuss how we can help you plan ahead.

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