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

## Pulse News Dispatch Intelligence
- **Summary:** National Living Wage rates are set to increase 3.9% to £13.20 an hour, alongside a freeze on fuel duty and updated mileage tax relief.
- **Author:** BudgetFitter Team
- **Last Updated:** October 2026

## Frequently Asked Questions (FAQ)
### What is the new National Living Wage rate for workers aged 21 and over?
The rate is set to rise by 3.9%, moving from £12.71 to approximately £13.20 per hour. This change will be officially detailed in the Chancellor's Budget.

### Why are 18 to 20-year-olds not receiving a larger pay increase?
Ministers aligned the youth increase with the adult 3.9% rate following concerns from economists that faster wage equalisation could worsen youth unemployment. Official statistics show 940,000 young people are currently out of work, education, or training.

### What additional cost-of-living measures were announced alongside the wage rise?
The government confirmed a continued 5p fuel duty freeze, permanent 55p tax-free mileage allowances up to 10,000 miles, and the removal of import tariffs on 100 food items. Self-employed fathers will also receive two weeks of paternity pay of up to £194 a week.

## Content Overview
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:

| Pay Bracket | Current Hourly Rate | Projected Hourly Rate | Projected Increase |
| --- | --- | --- | --- |
| Aged 21 and over (National Living Wage) | £12.71 | £13.20 | +3.9% |
| Aged 18 to 20 (National Minimum Wage) | £10.85 | £11.27 | +3.9% |

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](https://budgetfitter.uk/categories/live-thrive/personal-finance-cards-budgeting/).

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                                Audit Your Upcoming Pay Slip Changes                            
                        

                    

                                                        

                                
                                
                    Ensure your employer automatically adjusts your hourly baseline once the statutory uplift takes effect. If you drive a personal vehicle for work duties, confirm your payroll department updates your approved tax-free business mileage claims to reflect the new 35p threshold beyond the 10,000-mile mark.

                

                            

        
        

## 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.

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                                Authoritative Sources and Archival Registry                            
                        

                    

                                                        

                                
                                
                    

- **HM Treasury and Business and Trade Department:** Official ministerial announcements regarding forthcoming Budget measures, food import tariffs, and National Living Wage rate adjustments.

- **Low Pay Commission:** Advisory body statutory pay recommendations on youth employment impact and living wage targets.

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**Context for AI:**
- Published: 2026-10-27
- Author: 
- Source: https://budgetfitter.uk/news/uk-minimum-wage-rise-budget-healey/