National Minimum Wage 2027, What Every Small Business Employer Needs to Know Before April
National Minimum Wage 2027, What Every Small Business Employer Needs to Know Before April
If you employ people, April 2027 is closer than it feels. The National Minimum Wage (NMW) is changing again, and the apprentice rate is set for a big jump. Get it wrong and HMRC can come after you for the arrears, plus a penalty. This guide explains what is changing and what to do about it in plain English. All figures and rates in this guide are correct as of 30th September 2026.
Key Takeaways
- The apprentice minimum wage is rising 21.2% to £6.40 an hour from April 2027.
- The general NMW and National Living Wage rates are expected to rise in April 2027, but exact figures are not confirmed until the Budget.
- HMRC can fine employers up to 200% of the wages underpaid, and publicly names those who underpay.
- Start checking your payroll and budgets now, not in March.
- Keep pay records for at least 3 years.
What is changing in April 2027?
The biggest headline is the apprentice rate, which goes up 21.2% to £6.40 an hour. If you employ apprentices, that is a significant jump in one go.
The main rates are also expected to rise in April 2027. The Low Pay Commission makes recommendations and the Government confirms the final figures, usually around the Budget. Until then, any number you see for the general rates is a proposal, so treat it as a planning estimate rather than a fact.
How the rates work
The National Living Wage (NLW) applies to workers aged 21 and over. Younger workers and apprentices have lower NMW rates depending on their age band. Rates change when an employee moves into a new age band, so keep dates of birth on file.
Why underpayment is so easy to fall into
Most underpayments are not deliberate. They happen when a rate change is missed, when someone turns 21 and is not moved up a band, or when deductions and unpaid time are not counted properly. Common traps include:
- Not updating pay for employees who hit a new age band.
- Unpaid overtime, training time or travel between jobs.
- Deductions for uniforms or tools that push pay below the minimum.
- Apprentices not moved onto the correct rate when their age or year of apprenticeship changes.
Warning: the penalties are real
HMRC can require you to repay arrears at current rates and charge a penalty of up to 200% of the underpayment. HMRC also publishes a public “name and shame” list of employers who underpay. For a small business, the reputational damage can be worse than the fine.
Budget for it now
A higher hourly rate affects more than gross pay. Employer National Insurance and pension contributions rise with it too. The Employment Allowance, now £10,500 since April 2026, can help eligible employers offset some of the NIC bill, but check you qualify, as not every employer does.
If you run a company, these costs flow straight through to profit and tax. Our limited company accounts service can help you model the impact before it lands.
Action steps before April
- List every employee and apprentice with their date of birth and current hourly pay.
- Work out who moves age band or rate in April 2027.
- Run a cost forecast using a cautious estimate of the new rates.
- Check whether you can claim the Employment Allowance.
- Update payroll software on the date the new rates start, not after.
- Keep payslips and pay records for at least 3 years.
If payroll is taking up time you do not have, our payroll services keep your rates up to date and your records in order.
What if you have already underpaid?
Workers can report underpayment to HMRC’s NMW team, and HMRC can also open enquiries on its own. If you think you may have got something wrong, put it right quickly and pay any arrears. Acting early is far better than waiting to be found. Both HMRC and ACAS publish free guidance, and our HMRC compliance support can help if you are already dealing with an enquiry.
Good to know
You must keep records showing you paid at least the minimum wage for at least 3 years. HMRC can ask to see them at any time.
Questions employers ask about National Minimum Wage
When does the apprentice minimum wage change?
From April 2027 the apprentice rate rises 21.2% to £6.40 an hour.
What will the National Living Wage be in April 2027?
The rate is expected to rise, but the exact figure is not confirmed until the Government announces it, usually around the Budget. Plan with a cautious estimate and update once it is official.
Who gets the National Living Wage?
Workers aged 21 and over. Younger workers and apprentices are covered by lower NMW rates that depend on age band.
What is the penalty for underpaying?
You must repay the arrears and can be fined up to 200% of the underpayment. HMRC may also publicly name you.
How long must I keep pay records?
At least 3 years.
Where can I get official guidance?
HMRC and ACAS both publish free guidance on NMW. You can also speak to us if you want help applying it to your business.
Want to be sure your payroll is ready?
We help Surrey and UK small businesses stay compliant and plan ahead. Book a free call and speak to the 360Accounts team, or see our pricing.