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UK Minimum Wage Increase 2027: What the Reported 3.9% Rise to £13.20 Costs a Small Employer, and What to Do Before the Budget

TL;DR: How big is the UK minimum wage increase for 2027?

The UK minimum wage increase for 2027 is reported at 3.9%: the National Living Wage for workers aged 21 and over would go from £12.71 to about £13.20 an hour, and the rate for 18 to 20 year olds from £10.85 to about £11.27, according to The Times. Chancellor John Healey is expected to announce it at the Budget on Wednesday 28 October 2026, and the Treasury declined to comment on what it called speculation. For a small employer, the reported rise adds about £1,099 a year per full-time adult worker, employer National Insurance included. Budget for it now, change nothing on paper until the rates are confirmed.
Developing story. Last updated 26 Oct 2026, 23:00 CET. We'll update this article when the Chancellor confirms the rates in the Budget on 28 October.
Searches for John Healey's minimum wage announcement jumped by 600% in the UK on Monday, according to Google Trends, before he had said a word. The wage figures come from a Times report, picked up by City AM, LBC, the Mirror and Reuters, and they land two days before the Budget.
As a bootstrapping founder, I read wage news with a calculator open. Below: what is confirmed, what is only reported, the cost per worker with the maths shown, and the steps that are safe before Wednesday. If you're about to hire your first employee, this is the number to plan around.

What is the reported UK minimum wage increase for 2027?

According to The Times, as reported by City AM on 26 October 2026, the Chancellor will raise the minimum wage by 3.9% at the Budget. Here is how the reported figures compare with the rates in force today:
Age bandRate since 1 April 2026 (Confirmed)Reported rate for 2027Change per hour
21 and over (National Living Wage)£12.71about £13.20+£0.49
18 to 20£10.85about £11.27+£0.42
Under 18£8.00not reportednot reported
Apprentice£8.00not reportednot reported
Sources: current rates from GOV.UK; reported rates from The Times via City AM, LBC and Reuters, 26 Oct 2026.
LBC adds that Healey is expected to say he has accepted the recommendations of the Low Pay Commission, the independent body that advises the government on minimum wage rates each year.

What is confirmed and what is only reported?

Confirmed means an official GOV.UK page says it. Reported means only the media say it.
  • Confirmed: today's rates apply from 1 April 2026, according to the GOV.UK minimum wage rates page, which also says rates change on 1 April every year.
  • Confirmed: the government asked the Low Pay Commission on 16 March 2026 for rates "to come into effect on 1 April 2027", with advice due by the end of October.
  • Reported: the 3.9% rise, the £13.20 and £11.27 figures, the acceptance of the commission's advice and the end of the plan to bring the 18 to 20 rate up to the adult rate.
The commission hasn't published its 2027 recommendation yet, so every 2027 figure here carries the Reported label until the Chancellor speaks.

How much does a 3.9% minimum wage rise cost a small employer?

Let's break it down for one full-time adult worker on the National Living Wage, using a clearly stated example of 37.5 hours a week for 52 weeks, which is 1,950 paid hours a year:
  1. Extra per hour: £13.20 minus £12.71 is £0.49.
  2. Extra pay per year: £0.49 × 1,950 hours is £955.50. Annual pay moves from £24,784.50 to £25,740.
  3. Employer National Insurance: the employer rate for 2026 to 2027 is 15% above £5,000 a year, according to HMRC's rates and thresholds for employers. This worker is already above that line, so 15% of £955.50 adds £143.33.
  4. Total: about £1,098.83 a year per full-time adult worker.
A part-timer on 20 hours a week works 1,040 hours a year, so the rise adds £509.60 in pay and £76.44 in employer NI. Two caveats: the NI rates above cover the tax year ending 5 April 2027, and the 2027 to 2028 rates aren't published yet. Also, the Employment Allowance lets eligible employers cut their NI bill by up to £10,500 in 2026 to 2027, so a micro business with two or three staff pays less NI than this sum. Check that you qualify first.
If you run on thin margins, put this into your cash flow plan today, and rerun your financial projections with £13.20 as the base rate from April.

What changes for workers aged 18 to 20?

The reported rate for 18 to 20 year olds rises by the same 3.9%, from £10.85 to about £11.27, which is £0.42 more per hour, or £819 a year on our 1,950-hour example. City AM and LBC both report that this ends Labour's aim of bringing the youth rate up to the adult rate. The 16 March remit still said the government was committed to removing the age bands, and gave the commission full flexibility on the pace.
Under the 2026 to 2027 rules, employers pay 0% National Insurance for workers under 21 on earnings up to £50,270 a year, so if those rules carry over, the £819 is the full cost. The reports link the slower youth rise to unemployment among 16 to 24 year olds, which City AM puts above 16% for the first time in over a decade. Apprentice and under-18 rates for 2027 weren't in any report we read.

What we know so far

  • 16 Mar 2026: the government asks the Low Pay Commission for rates that start on 1 April 2027 (Confirmed).
  • 1 Apr 2026: the National Living Wage rises to £12.71 and the 18 to 20 rate to £10.85 (Confirmed).
  • 31 Jul 2026: the Treasury sets the Budget for 28 October 2026 (Confirmed).
  • 26 Oct 2026: The Times reports a 3.9% rise to about £13.20 and £11.27; the Treasury declines to comment (Reported).

What we don't know yet

  • The exact rates the Chancellor confirms on 28 October.
  • The 2027 rates for under-18s and apprentices, and the new accommodation offset.
  • Whether the new rates start on 1 April 2027, as the remit asks, or on another date.
  • Employer National Insurance rates and thresholds for the 2027 to 2028 tax year.

What this means for you: steps that are safe to take now

  1. Count your hours. List every worker, their age band and their weekly hours, so Wednesday's maths takes minutes.
  2. Budget at the reported rate. Use £13.20 and £11.27 in next year's plan now. If the Budget lands lower, you have a small buffer.
  3. Review your prices. A 3.9% wage rise moves your cost per hour of service. Our guides on pricing services versus products and pricing psychology show how to raise prices without losing your regulars.
  4. Check contracts and rotas after the Budget. Look for pay written as a fixed hourly figure, and rotas built around a wage budget. Our guide to contracts and agreements covers what to look for in employment terms.
  5. Look at apprentices and young staff separately. Their rates and NI treatment differ, so plan them in their own line.
  6. Rethink the hiring mix. Some tasks fit a freelancer better than a payroll hire. Read how to work with freelancers and the hiring mistakes to avoid during growth before you decide.
If money management isn't your strong side, start with financial management for non-finance founders. Freelancers in the EU facing their own 2027 budget changes can read our Budget 2027 guide for six EU countries.
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FAQ: UK minimum wage increase 2027

What will the UK minimum wage be in 2027?

The Times reports the National Living Wage for workers aged 21 and over will rise 3.9% to about £13.20 an hour, from £12.71. The Chancellor is expected to confirm it at the Budget on 28 October 2026.

Is the £13.20 minimum wage confirmed?

Not yet. As of 26 October 2026 it comes from a Times report, and the Treasury declined to comment.

When does the new minimum wage start?

The Low Pay Commission remit asks for rates from 1 April 2027. The reports don't state a start date.

What is the 2027 minimum wage for 18 to 20 year olds?

The reported rate is about £11.27 an hour, up 3.9% from £10.85, which ends the plan to bring it up to the adult rate.

How much will the minimum wage rise cost my business?

For a full-time adult worker on 37.5 hours a week, about £955.50 more pay a year plus £143.33 employer National Insurance at today's 15%, so about £1,099 in total.

Do employers pay National Insurance for under-21s?

Under the 2026 to 2027 rules, employers pay 0% National Insurance on earnings up to £50,270 a year for workers under 21 and apprentices under 25.
2026-10-26 22:27 Startup News and Trends