The UK Minimum Wage Just Rose to £12.71. Take-Home Pay Grew Slower.
From 1 April 2026, the National Living Wage rose from £12.21 to £12.71 an hour, a 4.1% increase for everyone aged 21 and over. On its own that sounds like straightforward good news. But the UK's tax-free personal allowance has been frozen at £12,570 since 2021, and it's due to stay frozen until at least 2030/31. A minimum-wage worker's pay has been rising every year while the point at which the taxman starts taking a cut has stood completely still, and five years into that mismatch, the effect on take-home pay is no longer trivial.
What actually changed on 1 April
The National Living Wage, the rate for workers aged 21 and over, went from £12.21 to £12.71 an hour. The 18-20 rate rose faster in percentage terms, from £10.00 to £10.85, an 8.5% jump, and the rate for under-18s and apprentices rose from £7.55 to £8.00, up 6.0%. All three increases are set by the Low Pay Commission and confirmed by the government each year, and the pattern of the younger bands rising faster than the adult rate has continued for several years now, part of the wider move toward narrowing the gap between the age bands over time.
For a full-time worker on the adult rate, working a standard 37.5-hour week across 52 weeks, that 4.1% increase works out to a gross annual salary of roughly £24,785, up from about £23,810 the year before. That's the number that shows up in the job description. It isn't the number that shows up in the bank account.
The allowance that hasn't moved since 2021
The personal allowance, the first £12,570 of income that isn't taxed at all, was frozen at that level from the 2021/22 tax year and has stayed frozen ever since, a policy commonly referred to as fiscal drag because it pulls more income into taxable territory every year purely through inflation and wage growth, without a single rate ever changing. The National Insurance primary threshold has largely tracked the same £12,570 figure since 2022, which means both major deductions on a minimum-wage payslip are anchored to a number that hasn't kept pace with the minimum wage itself.
In April 2021, the National Living Wage was £8.91 an hour. A full-time worker on that rate earned around £17,375 a year, of which only about £4,805 sat above the personal allowance and was actually taxable. Run the same full-time calculation on the 2026 rate of £12.71 and £12,215 of the £24,785 gross salary is now taxable, more than double the exposed amount, even though the tax-free threshold itself hasn't moved by a single pound.
Illustrative full-time calculation (37.5 hours/week, 52 weeks/year) using each year's income tax and National Insurance rules. Actual pay varies with contracted hours; many minimum-wage roles are part-time.
What this looks like in real numbers
Run the 2026 figures through the actual rules and a full-time National Living Wage earner on £24,785 pays about £2,443 in income tax and £977 in National Insurance, leaving roughly £21,365 net, about 86.2% of gross. Run the 2021 figures the same way and a full-time earner on £17,375 paid about £961 in income tax and £937 in National Insurance, keeping about £15,477 net, about 89.1% of gross. The gap between those two percentages, just under three points, doesn't sound dramatic until you realise it's happened to a group of workers whose pay only exists because the government legislated it upward every year, not because they changed jobs or got promoted.
If the Low Pay Commission's central estimate for April 2027 holds, £13.18 an hour, the same full-time calculation would keep about 85.7% of gross, assuming the personal allowance and National Insurance threshold are still frozen by then, which current policy says they will be. The direction of travel is consistent: every year the minimum wage rises and the tax-free threshold doesn't, a slightly bigger share of a minimum-wage salary becomes taxable.
The age bands tell a slightly different story
Because the personal allowance and National Insurance threshold apply the same way regardless of age, the 18-20 and under-18/apprentice rates currently sit further above the frozen thresholds proportionally, which means they keep a bigger share of gross pay for now. On the 2026 rates, a full-time 18-20 worker keeps about 88.6% of gross, and a full-time apprentice or under-18 worker keeps about 94.6%. Both bands will drift toward the 21+ figure over time as their own rates rise, exactly the same fiscal drag effect just a few years further behind.
Why this matters more than it used to
A frozen threshold matters more the longer it stays frozen, because the gap between it and a rising wage compounds every single year. Five years ago, a minimum-wage worker's entire pay packet was barely above the personal allowance and paid almost no income tax at all. Today, roughly half of a full-time minimum-wage salary sits above that line. If the freeze continues as currently planned through 2030/31, that share keeps growing every April the minimum wage goes up, regardless of what the headline tax rates are doing.
None of this means the minimum wage increases aren't real or welcome, a bigger gross number is still a bigger gross number. It just means the net improvement a minimum-wage worker actually feels in their account is consistently smaller than the percentage increase announced each spring, and the gap between the two has been widening steadily since 2021.
What to actually check
If you're on or near the National Living Wage, or budgeting around a pay rise tied to it, the useful number isn't the hourly rate increase, it's what that rate actually nets out to for your contracted hours once tax and National Insurance are applied. That's especially true if you work part-time, since the calculations above assume a full 37.5-hour week and most minimum-wage jobs don't run exactly that schedule.
MyPayCalc's UK calculator runs any gross salary through the current personal allowance, income tax bands, and National Insurance thresholds automatically, so you can see the real net figure for your own hours rather than estimating from the headline hourly rate.