You are here: Home - Household Bills - News -

National Minimum Wage to increase for under 25s

Written by: Paloma Kubiak
Nearly half a million young people will benefit from an increase to the National Minimum Wage, the Prime Minister has today announced.

David Cameron has revealed plans to increase the National Minimum Wage for those aged under 25 which should see them benefit by an average of £450 per year.

The increase will take effect in October 2016 and includes the following:

  • For those aged 21-24, it will rise by 3.7% to £6.95 an hour
  • For those aged 18-20, it will rise by 4.7% to £5.55 an hour
  • For those aged 16-17, it will rise by 3.4% to £4 an hour
  • Apprentices will see their wages rise by £3% to £3.40 an hour.

The rates have been recommended by the Low Pay Commission which the government has fully accepted this year.

The increase will mean that for the first time, the National Minimum Wage rate for 21-24-year-olds is “restored to its highest level in real terms, higher than its previous peak before the financial crisis”.

The National Living Wage

The new National Minimum Wage should not be confused with the new National Living Wage coming into force from April 2016.

Under the National Living Wage, people aged 25+ will receive £7.20 per hour, a pay rise of £900 a year.

This measure was first announced in the Summer Budget 2015.

From April 2017, the National Living Wage and National Minimum Wage rates will be uprated in parallel.

Voluntary Living Wage

There’s also a third scheme called the Living Wage.

However, this is voluntary scheme which employers can choose to pay, as opposed to the National Minimum Wage and the National Living Wage which are compulsory.

It is calculated according to the basic cost of living in the UK and is currently set at £8.25 an hour in the UK and £9.40 an hour for London.

The voluntary Living Wage is higher than the hourly rate set out for the two compulsory schemes detailed above.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • @YourMoneyUK All you need to know about the latest Current Account Switching winners and losers - hats off to Starl…
  • RT @WeareJust_PR: Many people struggling to make ends meet may not realise they are entitled to financial help or find the system too confu…
  • RT @WeareJust_PR: Many people struggling to make ends meet may not realise they are entitled to financial help or find the system too confu…

Read previous post:
self-employed mortgages, financial advice
City regulator outlines plans to plug financial advice gap

The city watchdog and the government have said there is a “clear need” for regulatory intervention to help millions of...