National Living Wage or real Living Wage: what each is

Two pay floors in the UK share almost the same name, and the confusion is understandable. The National Living Wage is the legal minimum hourly rate for workers aged 21 and over: £12.71 an hour from 1 April 2026, a 50p rise on the previous year¹. The real Living Wage is something different entirely: a voluntary rate calculated by the Resolution Foundation for the Living Wage Foundation, based on what people actually need to cover living costs, with a separate, higher rate for London².

The practical difference matters. The National Living Wage is enforced by HMRC, and an employer who pays less than it is breaking the law². The real Living Wage is not legally enforceable: employers choose to sign up to it, and around the country many have, but no worker has a legal right to it². An accredited employer commits to paying it, but that commitment runs to the Living Wage Foundation, not to a court.

The two rates side by side

The naming is the trap. "National Living Wage" sounds like the official version of a "living wage", and the government's own choice of name in 2016 borrowed the language of the Living Wage Foundation's earlier campaign. But the two rates are built on different ideas: one tracks average earnings, the other tracks the cost of a decent standard of living. That is why they rarely match, and why the Foundation's rate is usually higher.

National Living Wage: £12.71 an hour for workers aged 21 and over

The National Living Wage is the statutory minimum wage for workers aged 21 and over¹. From 1 April 2026 it stands at £12.71 an hour, up 50p, or 4.1 per cent, from £12.21¹. The government says the rise is worth £900 a year in gross pay to a full-time worker on the rate³.

The rate is calculated on gross pay, before tax and National Insurance are taken off⁴. A pay reference period, the window over which your average hourly pay is checked, cannot be longer than 31 days⁴. Working full-time on the National Living Wage at the 2025 rate of £12.21 provided a gross income of £23,875 a year, according to the Joseph Rowntree Foundation¹⁰.

The previous April, 2025, saw a larger rise: 6.7 per cent, from £11.44 to £12.21 an hour¹⁰. For a worker on the rate doing 37.5 hours a week, that increase was worth £1,505.54 a year in gross pay, or £125.46 a month¹¹.

How the National Living Wage is set: two-thirds of median earnings

The government asks the Low Pay Commission to ensure the National Living Wage does not drop below two-thirds of UK median earnings for workers in the National Living Wage population⁶. Median earnings is the midpoint: half of workers earn more, half earn less. So the legal floor is tied to what typical workers are paid, not to what anyone needs to live on.

For the 2026 rate, the Low Pay Commission projected a range of £12.55 to £12.86, with a central estimate of £12.71, and the government accepted that central figure⁵. Earlier estimates had been slightly lower: £12.65, within a range of £12.50 to £12.80, published alongside a May 2025 consultation⁶.

The two-thirds target is relatively recent. When the National Living Wage was introduced in April 2016 at £7.20 an hour for workers over 25, it was worth around 55 per cent of median hourly earnings². The government then set a target of 60 per cent of median earnings by 2020², and since 2020 it has had a target for the rate to reach two-thirds of median earnings, which it achieved with the 2024 rate¹².

The real Living Wage: based on living costs, with a separate London rate

The real Living Wage is a voluntary wage rate based on the amount of money people need to live⁷. It is calculated each year by the Resolution Foundation and published by the Living Wage Foundation, a campaigning organisation that aims to persuade employers to pay more than the legal minimum². The UK Living Wage and London Living Wage are voluntary pay benchmarks that employers can sign up to if they wish, not legally binding requirements⁸.

Because it is built from living costs rather than average earnings, the Foundation publishes two rates: one for the UK outside London and a higher one for London, where costs are higher. In 2021, for example, the Foundation's UK rate was £9.50 an hour, or £10.85 for London⁹. The London Living Wage was introduced in 2005⁷.

The Foundation's rates are announced at the start of November each year², and new rates for 2026 are due on 15 October. Accredited employers are expected to start paying a new rate as soon as possible, and within six months of it being announced².

Who gets which rate: age limits of 21 and 18

The age thresholds are where the two systems diverge most clearly:

• National Living Wage: workers aged 21 and over¹. This threshold came down from 25 to 23 in April 2021, and from 23 to 21 in April 2024¹.
• Real Living Wage: workers aged 18 and over, at an accredited employer⁸.
• National Minimum Wage: most workers aged 16 to 24 are entitled to it, at age-banded rates².

Since April 2024, the National Living Wage has applied to everyone aged 21 and over, after the age threshold came down from 23 to 21³. The Living Wage rates set by the Living Wage Foundation are a different, voluntary benchmark: they are intended for workers aged 18 and over, so an employer that chooses to pay them can extend the higher rate to colleagues aged 18 to 20, who are instead covered by the younger National Minimum Wage bands.

How the two rates have changed since the National Living Wage began

The National Living Wage was announced in the 2015 Summer Budget and set at £7.20 an hour for workers over 25, taking effect in April 2016 under the National Minimum Wage (Amendment) Regulations 2016². The National Minimum Wage itself dates back to the National Minimum Wage Act 1998².

The rate's path since then:

The big jumps of 2022 and 2023 came during the cost of living crisis: the 6.6 per cent rise to £9.50 in April 2022 failed to keep up with inflation, leaving minimum wage workers around £200 a year worse off in real terms, before the 9.7 per cent rise to £10.42 in April 2023 recovered much of the lost real value¹². The Resolution Foundation estimated at the outset that by 2020 some 6 million employees, 23 per cent of all employees in Britain, would have received some increase because of the National Living Wage, either directly or through pay rising above them¹⁶.

Being paid below the legal minimum: what can and cannot be enforced

If you are paid less than the National Living Wage or National Minimum Wage, that is a legal matter. Both rates are enforced by HMRC, which can pursue employers for arrears². Official guidance in Northern Ireland sets out the basics that apply across the UK: pay is calculated on gross pay before tax and National Insurance, and a pay reference period cannot be longer than 31 days⁴.

What you cannot enforce is the real Living Wage. Unlike the National Living Wage and National Minimum Wage, the Foundation's rate is not legally enforceable². If an accredited employer stops paying it, the recourse is a complaint to the Living Wage Foundation about its accreditation, not to HMRC about the law.

A few situations can quietly push your hourly pay below the legal floor:

• Salary sacrifice arrangements cannot reduce your cash earnings below the National Minimum Wage¹⁷. If you exchange part of your salary for pension contributions or other benefits, the arrangement is not allowed if it would take your pay under the floor.
• Umbrella company workers have the right to be paid at least the National Minimum Wage or National Living Wage, on time, in full, at the intervals agreed in the key information document.
• Deductions and unpaid time can matter: because the check is on average hourly pay over the reference period, unpaid travel time or deductions for uniforms can pull the effective rate under the legal minimum.

Where to get help

For checking what you are owed, official guidance on the National Minimum Wage and Living Wage is published on gov.uk, and nidirect carries the equivalent guidance for Northern Ireland⁴. HMRC handles complaints about underpayment of the legal rates².

For the wider picture of low pay, the Joseph Rowntree Foundation tracks how many households live below a Minimum Income Standard, the measure of what the public thinks people need for a decent living, and its analysis notes that government must allow families receiving in-work benefits to keep enough of what they earn, so that National Living Wage rises are not clawed back through reductions in Universal Credit and other support¹⁸. The Resolution Foundation's work on the National Living Wage shows who gains from it: just over half of the gross wage gains flow to households in the bottom half of the distribution¹⁶.

Related pages: National Living Wage and National Minimum Wage, the Minimum Income Standard, real wages since the cost of living crisis and how inflation sets increases to benefits and pay.