The UK government has officially confirmed that the National Minimum Wage and National Living Wage will rise from September 2025, bringing new pay rates for millions of workers. This is one of the largest increases in years and will affect employees across different age groups, apprentices, and part-time staff.
While the news has been welcomed by many workers who have been struggling with the cost of living crisis, it has also sparked debate among businesses, economists, and politicians. Employers are concerned about higher payroll costs, while workers hope this will finally bring some relief after years of inflation and rising bills.
So, what are the new pay rates? Who will benefit the most? And what does this mean for workers and businesses in the UK? Let’s break it down in detail.
What Is the Minimum Wage in the UK?
The minimum wage is the lowest hourly rate that employers are legally required to pay their staff. It applies to almost all workers, although the amount varies depending on:
- Age group (under 18, 18–20, 21–22, 23 and over).
- Apprenticeship status.
- National Living Wage category.
Every April, the UK government typically reviews wage rates, but in 2025, an additional increase is being introduced in September, making it a double rise within the same year.
Why Is the Wage Increase Happening in September 2025?
There are several reasons why the government has chosen to raise wages from September instead of waiting for April 2026:
- Cost of Living Pressures: Inflation and energy prices have hit households hard. An earlier wage boost is intended to provide faster relief.
- Political Pressure: With the general election around the corner, wage increases are being used to appeal to working-class voters.
- Labour Market Challenges: Employers are struggling to fill vacancies in hospitality, retail, and care sectors. Higher wages may attract more workers.
The New Minimum Wage Rates From September 2025
The following pay rates will apply from September 2025:
- National Living Wage (23 and over): £12.50 per hour
- Ages 21–22: £11.10 per hour
- Ages 18–20: £9.15 per hour
- Under 18: £6.75 per hour
- Apprentices: £6.50 per hour
This represents an increase of between 5% and 10% depending on the category.
How Does This Compare to Previous Rates?
To understand the significance, here is a comparison:
- In April 2025, the National Living Wage was £11.90 per hour. By September, it will rise to £12.50.
- Workers aged 21–22 currently earn £10.70 per hour but will now move to £11.10.
- For 18–20-year-olds, wages will jump from £8.80 to £9.15 per hour.
For full-time workers (working 37.5 hours per week), this could mean an extra £23–£50 per week in pay packets.
Who Will Benefit the Most?
The wage increase will benefit several groups in particular:
Young Workers
People in the 18–22 age bracket will see some of the largest percentage rises. This is important for students and early-career employees.
Low-Income Families
Households relying on part-time or low-paid work will see more take-home pay, which could ease the pressure of rent, groceries, and energy bills.
Care and Hospitality Workers
Sectors like hospitality, retail, and social care—where wages are typically low—will see the greatest direct impact.
What Does This Mean for Apprentices?
Apprentices are often the lowest paid workers in the UK. From September 2025, their minimum wage will increase to £6.50 per hour, up from £6.20.
While the increase may seem small compared to older workers, it is still a step forward for young apprentices balancing training with work.
Reactions From Workers
Many employees have welcomed the announcement:
- “It feels like we’re finally being listened to. Every week is a struggle, so this rise gives me some breathing space.” – A retail worker in Manchester.
- “It’s still not enough to keep up with bills, but at least it’s a step in the right direction.” – A care home assistant in Birmingham.
Concerns From Employers
Not everyone is celebrating. Businesses, especially small and medium enterprises (SMEs), have raised concerns:
- Higher Payroll Costs: Small businesses in retail, hospitality, and care will face increased costs.
- Price Increases: To offset wage rises, companies may increase product and service prices.
- Job Cuts or Reduced Hours: Some fear employers might reduce staff hours or cut jobs to manage costs.
Economic Experts’ Opinions
Economists are divided:
- Supporters say higher wages will boost consumer spending, helping the economy.
- Critics warn that businesses may pass on costs to customers, fuelling inflation.
The real impact will likely depend on how businesses balance wages with productivity.
How Much Extra Will Workers Earn Monthly?
Let’s break it down for a full-time worker (37.5 hours per week):
- 23 and over (National Living Wage):
£12.50 × 37.5 = £468.75 per week
Approx. £2,030 per month before tax. - 21–22 years old:
£11.10 × 37.5 = £416.25 per week
Approx. £1,800 per month before tax.
This shows a real difference compared to 2024 and early 2025 rates.
Impact on Universal Credit and Benefits
Workers receiving Universal Credit should note that higher earnings may reduce benefit payments. However, many will still see a net gain because of the higher wage.
The DWP has confirmed that new wage rates will be taken into account when recalculating support.
Will This Solve the Cost of Living Crisis?
Not entirely. While the wage rise is significant, experts warn that it may not fully offset:
- High housing costs.
- Rising energy bills.
- Inflation in food and transport.
Still, for many workers, it provides much-needed relief and greater independence.
Minimum Wage vs Real Living Wage
It is important to note the difference:
- National Minimum Wage / Living Wage (set by the government).
- Real Living Wage (calculated by the Living Wage Foundation, based on actual living costs).
The Real Living Wage in 2025 is estimated to be around £13.50 per hour in London and £12.20 elsewhere in the UK. This shows that even after the rise, some workers will still earn less than what campaigners call a “true living wage.”
International Comparison
How does the UK compare to other countries?
- Germany: €12.41 per hour (approx. £10.70).
- France: €11.72 per hour (approx. £10.10).
- Ireland: €12.90 per hour (approx. £11.10).
With the new rates, the UK will be among the highest minimum wages in Europe.
Future of UK Wage Policy
The Low Pay Commission (LPC) has indicated that minimum wages will continue to rise in the coming years. The long-term target is to ensure that wages remain at least two-thirds of median earnings.
If this trend continues, by 2027, the National Living Wage could exceed £13 per hour.
Tips for Workers to Make the Most of the Wage Rise
- Review Your Budget: Adjust household budgets to reflect new income.
- Check Benefits Impact: Make sure you understand how Universal Credit or Housing Benefit may change.
- Negotiate Hours: If your employer cuts hours, negotiate for flexibility.
- Start Saving: Even small amounts can build security for the future.
Final Thoughts
The September 2025 UK minimum wage rise is one of the most significant changes in recent years, promising higher pay for millions of workers. For some, it will mean an extra £50 a week, providing relief from rising costs.
However, the rise also poses challenges for businesses and may not fully solve the cost of living crisis. While the government presents this as a victory for workers, the reality is more complex.
Still, for millions of employees across the country, the increase offers hope and a stronger foundation for financial stability.