Coronavirus - Get the latest updates and resources from MyWalletHero - Find out more.
Advertiser Disclosure

Minimum hourly wage rises to £8.91: what you need to know

Minimum hourly wage rises to £8.91: what you need to know
Image source: Getty Images.

In the recent 2020 Spending Review, Chancellor Rishi Sunak announced a minimum wage rise. Here’s everything you need to know about the announcement and how the minimum wage increase could affect you.

What was the Spending Review announcement?

This year’s Spending Review announcement was a bit different as it only covers the period from April 2020 to April 2021. This is largely because of the coronavirus pandemic. The coming year will be an important and unusual one for the British economy.

The announcement covered a range of topics relating to government spending and how funds will be allocated. As part of the review, the government has decided to accept the recommendations made by the Low Pay Commission to increase the National Living Wage and the National Minimum Wage.

When are the changes due to take place?

Although the announcement has just been made, the new minimum wage rise in the UK won’t come into effect until April 2021.

So although this pay rise may be on the horizon, it’s still important to budget your money wisely until the minimum wage increase actually happens.  

What’s the difference between the National Living Wage and the National Minimum Wage?

Whether you qualify for the National Living Wage or the National Minimum Wage depends on your age. Currently, everyone is entitled to earn at least the National Minimum Wage, but only people over 25 qualify for the National Living Wage. However, under the Spending Review announcement, this will change from April 2021. 

Under the new minimum wage rise, there will be some changes to whether you qualify for the National Living Wage or National Minimum Wage:

National Living Wage (NLW)

If you’re aged 23 years or older in April 2021, you will qualify for the new NLW.

National Minimum Wage (NMW)

If you’re over 16 but under 23 years old in April 2021, you will qualify for the NMW on a tiered system depending on your age.

How much is the minimum wage rise?

The government has decided to accept recommendations from the Low Pay Commission for a minimum wage rise but with some tweaks to the age brackets.

The National Living Wage (NLW) will see the following increase:

  • 23 years old or older – a 2.2% increase from £8.72 to £8.91 per hour.

The National Minimum Wage (NMW) will see the following increases:

  • 21-22 years old – a 2% increase from £8.20 to £8.36 per hour.
  • 18-20 years old – a 1.7% increase from £6.45 to £6.56 per hour.
  • 16-17 years old – a 1.5% increase from £4.55 to £4.62 per hour.
  • Apprentice – a 3.6% increase from £4.15 to £4.30 per hour.

Who else is effected by the announcement?

Alongside the minimum wage rise, the government has also announced plans to increase the pay for some public sector workers. Although the review outlined that some pay rises in the public sector will be restrained, some will benefit.

Over one million NHS workers will be provided a well-deserved pay rise. Also, the 2.1 million lowest-paid public sector workers, who earn below the median wage of £24,000, will receive a minimum £250 increase. 

So there are a number of changes incoming that might affect you. It’s also excellent to see some good news for some of our frontline workers that have played such a vital role in keeping us all safe during the pandemic.

What next?

If you’re looking for more ways to make your money work for you, why not sign up for MyWalletHero’s email newsletter? You’ll receive our team’s top money-saving tips, lifestyle hacks and handy personal finance ‘must-knows’ – delivered straight to your inbox…

Just enter your email address below to sign up now:

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.