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, how it’s decided and how minimum wage affects workers depending on their age.
What is the minimum wage in the UK?
The 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 25, 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 24 and under.
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. As of April 2020, the rates for NLW and NMW are as follows:
| Your Age | Entitled Wage | Current Hourly rate |
|---|---|---|
| 25 and over | National Living Wage | £8.72 |
| 21 to 24 years old | National Minimum Wage | £8.20 |
| 18 to 20 years old | National Minimum Wage | £6.45 |
| 16 to 17 years old | National Minimum Wage | £4.55 |
| Apprentice (in their first year & under 19) | National Minimum Wage | £4.15 |
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.
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Will the minimum wage increase soon?
The government usually increases the minimum wage rates in April each year (the last increase was in April 2020), but you can also expect an increase when you turn 18, 21 or 25. If you’re an apprentice, your rate of pay will also increase when you turn 19 or complete your first year of apprenticeship.
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 and 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 of £372 per week or £1,615 per month, this is also taken out of your salary if you’re employed.
An employer cannot use the cost of tools, uniforms, travel or training courses to reduce your pay.***
Are you taxed if you earn minimum wage?
Yes, 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 £12,500 per year. Anything you earn between £12,501 and £50,000 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 25 and over. At the current rate, an NLW salary of 40 hours a week means you’d earn £348.80, giving you a monthly salary of £1,395.20 before tax and any applicable deductions.
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