National Minimum Wage: Rates, Calculations and Records

The National Minimum Wage is more than an hourly rate: it is a calculation of the pay a worker gets for the hours they actually work. This plain-English guide sets out the current rates, how the calculation works, the records you must keep and how to put underpayments right. It is based on HMRC's September 2026 webinar "Salary sacrifice and the National Minimum Wage" and HMRC's published guidance, with links to the official sources at the end.

The 5 key points

1. It's a calculation, not just a rate

For each pay reference period, divide the pay that counts for the minimum wage by the hours actually worked. The result must be at least the rate for the worker's age.

2. The rates from 1 April 2026

£12.71 an hour for workers aged 21 and over, £10.85 for 18 to 20 year olds, and £8.00 for 16 and 17 year olds and apprentices.

3. The type of work decides how hours are counted

There are four types: salaried hours work, time work, output work and unmeasured work. Getting the type right is the first step in any check.

4. Keep pay and time records for everyone

Salaried staff included. Without records of the time worked, you can't prove you paid the minimum wage. Workers have a right to see their records, and the burden of proof is on you.

5. Put mistakes right before HMRC does

If you repay arrears before HMRC opens a compliance check, there are no penalties and no public naming. You can also tell HMRC through a voluntary declaration.

Rates from 1 April 2026

21+

National Living Wage: workers aged 21 and over

£12.71 an hour

18–20

Workers aged 18 to 20

£10.85 an hour

16–17

Workers aged 16 and 17, and apprentices under 19 or in the first year of their apprenticeship

£8.00 an hour

Rates change every April, so check your payroll each year

Working out the hourly rate

For every pay reference period, compare the pay that counts with the hours worked in that period.

The minimum wage check

Pay for the minimum wage

Hours actually worked

At least the rate for their age

Use actual hours, not averages or contracted hours

Not all pay counts: some pay elements don't count towards the minimum wage, and some deductions reduce minimum wage pay. HMRC's "Calculating the minimum wage" guidance sets out the detail.
Salary sacrifice lowers the pay that counts: it reduces contractual pay, so the new lower figure is the one you test. See our salary sacrifice guide below.
Averages hide underpayments: if a worker works more hours than you assumed, their real hourly rate falls, and they may drop below the minimum wage without anyone noticing.

The four types of work

Everyone knows the minimum wage is an hourly rate, but how you get to that rate depends on the type of work.

Paid an annual salary under a contract for a set number of basic hours a year

Salaried hours work

Paid by the hour

Time work

Paid by the number of things made or tasks completed

Output work

Paid in any other way, for example where hours aren't set in the contract

Unmeasured work

Records you must keep

Whatever type of worker you employ, you need records that show you paid at least the minimum wage for all time worked in each pay reference period. Some employers think salaried staff don't need time records. For the minimum wage, they do.

Pay records

Employment contracts, any agreements to reduce contractual pay such as salary sacrifice, and a detailed breakdown of each worker's pay and deductions for every pay reference period.

Time records

A way to show total working time for every worker in every pay reference period, such as digital or paper timesheets, clocking in and out, or a time and attendance system.

Workers have a legal right to see their minimum wage records and can take you to an employment tribunal if they think they've been underpaid. If you don't have the records, you can't prove you paid them properly.

Putting underpayments right

If you find a problem, there are no penalties and no public naming if you repay the arrears before HMRC opens a compliance check.

Fix it straight away: change any working practices that cause underpayments

All workers paid correctly from now on

Work out how much was underpaid in each pay reference period

Arrears per period

For arrears from earlier years, uplift them using today's minimum wage rates

Total arrears due

Pay current staff through payroll, with tax and National Insurance as needed. Make every reasonable effort to trace and pay former staff

Workers repaid

Optional: tell HMRC with a voluntary declaration. Arrears fully repaid this way bring no penalties or naming

To ask for the voluntary declaration form, email voluntarydeclaration.nmw@hmrc.gov.uk.

What is changing

The Fair Work Agency takes over from April 2027

In April 2027, HMRC's National Minimum Wage team is due to move to the new Fair Work Agency, part of the government's Make Work Pay plan. Until then, HMRC remains responsible for all minimum wage enforcement and compliance, working under contract to the Fair Work Agency. Carry on dealing with the minimum wage as you do now.

Official guidance

Not sure your pay meets the minimum wage for every hour worked? We can check your payroll, set up the right time records and help you put any underpayments right.

Talk to us about payroll

This guide is general information based on HMRC's published guidance and webinar, and is not advice for your specific circumstances. Rules change, so check the official guidance or speak to us before acting.