National Minimum Wage April 2026: Forecasted Rise and What It Could Mean for Contractors
Background to the Forecast
The Low Pay Commission (LPC) has been asked by the UK Government to recommend the rates for the National Minimum Wage (NMW) and National Living Wage (NLW) from April 2026.
A central aim is to keep the NLW at or above two-thirds of the median hourly pay for eligible workers — a recognised benchmark for measuring low pay in the UK.
In addition to that benchmark, the LPC must also weigh up:
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The cost of living for workers
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Forecasted inflation between April 2026 and April 2027
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The impact on the labour market, business competitiveness and compliance
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The wider economic outlook
What the Current Estimates Show
Although the confirmed rates won’t be known until later in 2025, the LPC’s central estimate indicates the NLW for over-21s could reach £12.71 per hour — a 4.1% rise.
The LPC also projects a potential range from £12.55 to £12.86, depending on how wage growth trends over the coming months.
These figures have increased since May 2025’s forecast of £12.65 (range £12.50–£12.80), with the upward shift driven by stronger-than-expected wage growth in early 2025.
Why the Numbers Could Shift Again
The LPC’s modelling currently assumes:
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5.1% annual wage growth as of May 2025
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3.9% projected year-end wage growth for Q4 2025
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3% projected for Q4 2026
If wage growth continues to exceed forecasts, the final recommendation could be higher than the central estimate.
Next Steps in the Process
The LPC will continue monitoring pay trends, economic indicators and business impacts in the run-up to its October 2025 deadline for submitting recommendations. The Government will then announce the official NMW and NLW rates that will apply from April 2026.
Why This Matters for Umbrella Company Contractors
For contractors working via an umbrella company, any increase to the NMW or NLW can directly affect take-home pay, contract rates and payroll compliance.
Agencies and end clients may also need to review umbrella company payroll processes to ensure compliance once the new rates are introduced.
Forward planning can help:
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Avoid last-minute rate renegotiations
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Ensure contracts spanning into April 2026 remain compliant
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Manage budgeting for wage increases
