UK Government has officially confirmed a major update that will affect millions of workers across the country. From October 2025, the National Minimum Wage and National Living Wage will rise once again — giving a welcome boost to employees struggling with the cost of living.
This announcement follows months of review by the Low Pay Commission (LPC) and forms part of the government’s plan to ensure fair pay for all workers, especially during a time when inflation and household expenses remain high. Let’s take a closer look at what’s changing, who will benefit, and how much you can expect to earn under the new 2025 minimum wage rates.
What the Government Has Confirmed
In a statement from the Department for Business and Trade, the government confirmed that the National Living Wage (the rate for workers aged 21 and over) will increase significantly from £11.44 to £12.12 per hour starting 1 October 2025.
This marks one of the biggest year-on-year increases in over a decade, ensuring that full-time workers on minimum pay see a meaningful rise in their weekly and monthly earnings.
Ministers have said the rise reflects ongoing efforts to “make work pay” and to keep pace with the growing cost of living faced by millions of British households.
Full List of New 2025 Minimum Wage Rates
Here’s the official breakdown of the new rates that will come into effect from October 2025 across the United Kingdom:
- National Living Wage (21 and over) – £12.12 per hour
- Aged 18 to 20 – £9.30 per hour
- Aged 16 to 17 – £6.92 per hour
- Apprentices – £6.40 per hour
These updated figures represent an average increase of between 6% and 8% across different age brackets, depending on the category of worker.
For example, a full-time employee working 37.5 hours a week on the National Living Wage will now earn approximately £471 per week, compared to £429 previously — an annual increase of around £2,200 before tax.
Why the Minimum Wage Is Rising
The UK Government reviews the minimum wage annually based on recommendations from the Low Pay Commission (LPC), an independent body responsible for advising ministers on wage policy.
The 2025 rise aims to:
- Support low-income workers during continued cost-of-living pressures.
- Ensure that wage growth keeps pace with inflation.
- Encourage workforce participation and productivity.
- Move the UK closer to achieving a “high wage, high skill, high productivity” economy.
In its latest report, the LPC emphasised that the rise was necessary to maintain fairness and reduce income inequality, particularly for younger workers and those in part-time or casual roles.
How the Change Affects Different Workers
The impact of the new minimum wage varies depending on your age, employment type, and hours worked.
For younger workers, this year’s rise represents a stronger push towards wage equality, narrowing the gap between the Living Wage and younger age brackets. For the first time in years, 18-20-year-olds will see a pay jump of nearly 8%, the highest in their group since 2019.
For apprentices, the increase to £6.40 per hour aims to make vocational training and entry-level employment more financially viable, encouraging more young people to choose skilled trades and technical roles.
For adult workers aged 21 and above, the rise reinforces the government’s long-term goal of ensuring the National Living Wage reaches two-thirds of median earnings — a benchmark originally set by former Chancellor George Osborne.
Government’s Statement on the Wage Rise
Business Secretary Kemi Badenoch described the move as “a crucial step in helping hard-working people across Britain to keep more of what they earn.”
She added, “We are committed to ensuring that work always pays. This increase in the minimum wage will not only support workers but also strengthen local economies and businesses that depend on consumer spending.”
Meanwhile, Prime Minister Rishi Sunak highlighted that the rise reflects the government’s continued efforts to reward work and reduce in-work poverty. He stated, “This government will always back those who work hard, and this pay rise is part of that commitment.”
Reaction from Workers and Employers
The announcement has sparked widespread debate among both employees and business owners.
Many workers have welcomed the increase, saying it will bring much-needed relief as bills, rent, and grocery prices remain high. For many in the hospitality, retail, and care sectors, even an extra 60–70 pence per hour can make a noticeable difference in take-home pay.
However, some small business owners have expressed concern that higher wage costs could put pressure on already tight margins. Sectors such as hospitality, childcare, and social care are expected to feel the most impact, given their high reliance on lower-paid staff.
Trade unions, including Unite and GMB, have praised the decision but called for further measures such as stronger job security and better protections for part-time workers.
How the 2025 Wage Rise Compares to Previous Years
The National Living Wage has increased steadily since its introduction in 2016. Back then, the rate was £7.20 per hour for workers aged 25 and over.
Here’s a quick look at the trend over the past few years:
- 2021: £8.91
- 2022: £9.50
- 2023: £10.42
- 2024: £11.44
- 2025: £12.12
This means the National Living Wage will have risen by over 65% in just four years, a significant leap compared to average wage growth during the same period.
Impact on the UK Economy
Economists believe that the 2025 wage increase will inject billions of pounds into the economy through consumer spending.
Higher wages typically boost demand for goods and services, which in turn supports job creation. However, experts caution that businesses may respond by raising prices or reducing staff hours to offset higher payroll costs.
The Office for Budget Responsibility (OBR) projects that the wage rise could lead to a modest 0.1% increase in overall inflation in the short term — but the long-term impact is expected to be positive for household income and productivity.
What Workers Should Do Now
If you’re currently earning near the minimum wage, this is an excellent time to:
- Review your payslip in October 2025 to ensure your employer is applying the correct new rate.
- Update your budget and savings plan, as your monthly income will increase.
- Speak to HR or payroll if you’re unsure which wage category applies to you.
- Consider upskilling or training, as higher pay thresholds often come with greater expectations from employers.
Employers, on the other hand, should prepare early by updating payroll systems, staff contracts, and budget forecasts to reflect the new rates.
Expert Opinions
Labour market analysts have largely welcomed the increase but note that regional living costs still vary widely across the UK.
Professor Jonathan Portes, economist at King’s College London, commented:
“While this increase is a significant step in supporting low-income households, further regional adjustments might be needed to reflect the higher cost of living in cities like London and Manchester.”
The Resolution Foundation, a leading think tank, said the rise will lift over 300,000 workers out of relative low pay but warned that real progress requires sustained growth in productivity and career progression.
Conclusion
The 2025 Minimum Wage Rise represents one of the most important policy changes for UK workers in recent years. With rates increasing across all age brackets, millions stand to benefit from fairer and higher pay.
While challenges remain for small businesses, the government’s commitment to supporting workers and ensuring wages reflect the cost of living is clear. For employees, this is a moment to celebrate — a sign that their hard work is finally being recognised.
As October 2025 approaches, both employers and workers should prepare for these changes to ensure a smooth transition into a new era of fair pay in Britain.