From April 2026, the NLW will increase to £12.71, an increase of 4.1%, the Treasury has confirmed. The wage rate for 18-to 20-year-olds will increase to £10.85, an increase of 8.5%.
It means business will have to pay a full-time worker on the National Living Wage an additional £900 a year, rising to £1,500 for those on the National Minimum Wage.
In total, the wage rises represent a £1.4bn rise in additional costs for hospitality businesses, according to UKHospitality (UKH).
The trade body warned the tax hike meant delivering business rates reformation in tomorrow’s Budget was even more critical for hospitality firms.
Endless costs
Chair Kate Nicholls said: “Increases to minimum wage rates are yet another cost for hospitality businesses to balance, at a time when they are already being taxed out.
“Hospitality businesses have reached their limit of absorbing seemingly endless additional costs. They will simply all be passed through to the consumer, ultimately fuelling inflation.”
Nicholls added the “higher-than-expected” increase to the rates for under-21s were also “worrying” for the sector.
She continued: “Businesses had hoped the Government would take a more pragmatic approach to achieving its goal of equalising all wage rates.
“When there are almost a million young people not in employment, education or training, this will put further pressure on already fragile youth employment rates. Given the Government’s ambition to help young people back into work, this level of increase is concerning.”
Supporting businesses
Data analysis conducted by The Morning Advertiser (The MA) earlier this year showed wage costs have soared by more than 40% in the past years.
In a video message posted today (Tuesday 25 November), Chancellor Rachel Reeves said “too many people were struggling to make ends meet”, adding this needed to change.
However, she also reaffirmed the Government’s pledge to support businesses while protecting jobs and the economy.
She said: “It is why we have capped corporation tax, and why we’re reforming business rates, particularly so that they help the high street.
“In this week’s Budget, I’m going to deliver our mandate for change, and I’m determined to cut the cost of living for everyone.”
