UK Minimum Wage Set to Rise to £13.20 in Upcoming Budget

Chancellor John Healey is preparing to announce a 3.9% rise to the National Living Wage in Wednesday’s Budget, lifting the statutory baseline for staff aged 21 and over from £12.71 to £13.20 per hour. However, the government will pause its rapid wage equalisation strategy for younger workers. The National Minimum Wage for staff aged 18 to 20 is also expected to increase at the same 3.9% pace, moving from £10.85 to £11.27 per hour, rather than receiving the substantial double-digit bumps introduced in previous fiscal events.

How Statutory Pay Rates Compare

The decision to align youth wage growth with standard adult rates comes after warnings from economists and business groups about rising youth joblessness, with UK figures showing 940,000 young people currently not in education, employment, or training. The statutory changes are set out below:

Ministers maintain that full wage equalisation across adult age bands remains government policy, but they note the timetable must reflect broader labour market realities. Alongside the wage review, the Treasury has confirmed wider cost-of-living adjustments, including removing tariffs across 100 food items to save households up to £21 annually, maintaining the 5p fuel duty discount, and making permanent the 55p tax-free business mileage allowance up to 10,000 miles (increasing from 25p to 35p thereafter). To keep track of household allowances, review our personal finance and budgeting guide.

What Workers Should Do Next

Low-income workers and households planning their finances for the coming tax year should take several key practical steps:

• Check Statutory Compliance: Monitor upcoming pay slips to guarantee employers do not breach National Living Wage standards or underpay staff based on their current age band.
• Maximise Mileage Expenses: Drivers travelling on company business must log all travel records to make the most of the permanent 55p mileage relief and the higher 35p secondary band.
• Monitor Benefit Adjustments: Carers should note that the replacement of the strict weekly earnings limit with a gradual earnings taper will not take effect until 2030, meaning existing earnings thresholds still apply today.