Budget 2015 - Minimum Wage Increases from £6.50 to £9.00 by 2020 - The National Living Wage

Minimum Wage Changes

A new compulsory National Living Wage for over-25s was outlined in the 2015 summer budget which will be set at £7.20 per hour next April which will rise to £9 per hour by 2020.

From October the following minimum hourly wage rates will also apply:

  • Aged 21 and above £6.70 (up from £6.50)
  • 18-20 year olds £5.30 (up from £5.13)
  • 16 & 17 year olds £3.87 (up from £3.79)
  • Apprentices £3.30 (up from £2.73)

The new National Living Wage is not to be confused with the voluntary living wage that many companies currently employ, which is £7.85 per hour (£9.15 per hour in London).

Minimum rates for under 25’s will only be increasing at inflationary levels.


For a full time employee over 25 on the minimum wage, these changes will result in a £5,200 increase in salary between 2015 and 2020. For the employer, who also pays employer’s National Insurance Contributions, the effective cost increase will be almost £6,000 per employee per year.

There will be an increase in the Employer’s NI Contributions holiday from £2,000 to £3,000, but this will barely be enough to cover the increased NI due for just one employee.

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