National Minimum Wage & National Living Wage — A Trade Employer's Guide (2026)

NLW vs NMW — What's the Difference?

People use "minimum wage" as a catch-all, but legally there are several different rates. The headline distinction is between the National Living Wage and the National Minimum Wage.

The National Living Wage is the highest band and applies to all workers aged 21 and over. Despite the name, it has nothing to do with the voluntary "real Living Wage" promoted by the Living Wage Foundation — the NLW is the statutory legal minimum set by the Government each year.

The National Minimum Wage covers the younger age bands and apprentices. There is an 18 to 20 rate, an under-18 rate (for those above school leaving age), and a separate apprentice rate. Everyone of school leaving age or over who works in the UK is entitled to at least the rate for their category — there is no exemption for small businesses, sole traders who take on one apprentice, or family members on the payroll.

The 2025/26 Rates

Rates change every April. The figures below apply to the 2025/26 tax year. Always confirm the current numbers on GOV.UK before running payroll, because they are revised annually and the bands themselves occasionally change.

Note that the under-18 rate and the apprentice rate sit at the same level for 2025/26, but they are separate legal categories with different qualifying conditions. Treat them as distinct — the conditions for the apprentice rate are easy to get wrong.

The Apprentice Rate — Who Qualifies and When It Ends

The apprentice rate is the most commonly misapplied band in the trades, because so many small firms take on apprentices and assume the cheap rate applies for the whole apprenticeship. It does not.

To be paid the apprentice rate, the worker must be on a recognised apprenticeship scheme (in England, an approved apprenticeship standard or framework with a genuine training element). They qualify for the apprentice rate only if they are:

• Aged under 19, at any stage of their apprenticeship; or
• Aged 19 or over but in the first year of their apprenticeship.

The moment an apprentice turns 19 and completes the first year of the apprenticeship, they move onto the age-related rate for their age — so a 21-year-old apprentice who has finished their first year is entitled to the full National Living Wage. This transition is exactly where employers underpay: the apprentice has a birthday or passes the twelve-month mark, payroll isn't updated, and arrears quietly build. Diary the date your apprentice hits one year, and diary every apprentice's birthday.

Also remember that an apprenticeship must involve genuine training. Calling someone an "apprentice" to justify a lower rate, when they are really just an untrained labourer with no training agreement, does not qualify for the apprentice rate.

How Trade Employers Accidentally Underpay

Most NMW breaches in the trades are not deliberate. They come from hours and deductions that the employer never thinks of as "pay" but which HMRC counts. Here are the ones that catch trade firms out.

Unpaid travel time between jobs

Travel from home to a fixed workplace is not working time. But once a worker starts their day, travel between jobs, between sites, or from the yard to a customer counts as working time and must be paid. If your electrician is paid from when they reach the first job but does three hours of inter-site driving during the day for free, their effective hourly rate across the paid hours can drop below the minimum.

Deductions for tools, uniform and PPE

This is one of the biggest traps. If you deduct money from a worker's pay, or require them to buy items connected to their job, and that takes their pay below the minimum for the pay reference period, you have breached NMW. That includes deductions or required spending on tools, branded workwear and — critically — personal protective equipment. PPE that is necessary for the job must in any case be provided free under health and safety law; making a worker pay for it can both breach those rules and push pay below the minimum.

Rounding hours down

Rounding a worker's clocked time down to the nearest 15 or 30 minutes, or docking a couple of minutes here and there, accumulates into unpaid working time. Over a year those minutes add up to real arrears. Pay the actual hours worked.

Training time and "setting up" time

Time spent on required training, toolbox talks, loading the van at the yard, or setting up and packing down on site is working time. If a labourer is told to arrive 20 minutes early every day to load materials but is only paid from the official start, that unpaid set-up time can drag the average rate below the minimum.

Salaried workers whose hours creep up

A salaried site manager or office worker on a fixed annual salary can fall below the minimum if their actual hours creep upward — busy periods, late finishes, weekend call-outs — without any change to their pay. Divide the salary by the actual hours worked in the pay reference period and check it still clears the relevant rate. Salaried does not mean exempt.

Pay Reference Periods and Averaging

NMW compliance is tested over a pay reference period — usually the period you pay for, so a week if you pay weekly, or a month if you pay monthly (a pay reference period can be no longer than one month). Within that period, total pay that counts for NMW purposes is divided by the total hours worked, and the result must be at least the relevant rate.

This averaging is why a single underpaid week can be a breach even if other weeks are generous — each pay reference period stands on its own and can't be rescued by a good month either side. It also means that lumpy deductions, a one-off tool purchase, or a heavy week of unpaid travel can tip an otherwise compliant worker below the line in a single period. Run the check every period, for every worker, rather than assuming a comfortable headline rate gives you a buffer.

Record-Keeping

The law puts the burden of proof on the employer. You must keep records sufficient to show that you have paid at least the minimum wage, and you should keep them for several years (GOV.UK sets out the current retention period — keeping at least six years of payroll records is sensible practice). If a worker complains or HMRC investigates, the absence of records counts against you: where an employer can't produce records, a worker is presumed to have been underpaid unless the employer proves otherwise.

Good records for a trade business include accurate timesheets capturing all working time (including travel between jobs and set-up time), payslips, the basis of each worker's rate and age band, apprenticeship agreements and start dates, and a clear log of any deductions and what they were for. A proper job and timesheet system that captures the hours as they happen is far more defensible than reconstructing them later.

The Consequences of Getting It Wrong

HMRC enforces the minimum wage and the consequences of a breach are serious — and they apply whether the underpayment was deliberate or an honest mistake.

• Arrears: You must repay all the wages owed to the worker, calculated at the current rate (which can be higher than the rate in force when the underpayment happened, increasing the bill).
• Penalties: HMRC can charge a penalty of up to 200% of the arrears owed, subject to a maximum per worker. The penalty is reduced if you pay promptly, but it is still a significant cost on top of the arrears.
• Public naming: The Government periodically publishes the names of employers who have breached NMW. Being named is a reputational hit that customers, future recruits and apprentices can all see.
• Enforcement action: In the most serious cases, criminal prosecution and director disqualification are possible.

Because the rules count travel, training, deductions and set-up time that owners often overlook, a firm can rack up arrears for years while genuinely believing it pays well above the minimum. The cost of a quick periodic check is trivial compared with a four-figure-per-worker arrears bill plus penalty.

A Simple Compliance Routine

You don't need a payroll department to stay compliant — you need a short, repeatable check. Each pay reference period:

• Total every worker's actual working hours, including inter-site travel, training and set-up time.
• Subtract any deductions and any required job-related spending from their pay.
• Divide the resulting pay by the hours and confirm it clears the worker's rate.
• Check each worker's age band and apprentice status against the diary — birthdays and apprenticeship anniversaries change the rate.
• Keep the timesheets, payslips and deduction records on file.

Quick Reference: NMW & NLW Rates 2025/26

This article is general guidance and not legal, employment or financial advice. Minimum wage rates and the rules around them change every April and can be revised at other times — always check the current figures and conditions on GOV.UK, and take professional advice for your specific situation.