An extra £910 per year will be hitting the bank accounts of millions of workers across the UK from April after a wage boost in the Budget.

From April 1, 2027, the National Living Wage will increase by 3.9% from £12.71 per hour to £13.21, benefiting around 2.3 million workers aged 21 and over. The uplift means full-time workers will see their gross annual earnings increase by £910 per year from April, according to HM Treasury. Younger workers on the National Minimum Wage will also benefit from higher pay, with rates also set to rise by 3.9% on April 1.

The National Minimum Wage, which is for 18 to 20-year-olds, will rise from £10.85 per hour to £11.27 in the 2027 to 2028 tax year. It’s a smaller rise than the 26% increase Labour has put in place for younger workers since returning to power in 2024, and means rates still remain below the National Living Wage for older workers.

The rise ends the trend of hiking the National Minimum Wage for 18 to 20-year-olds by more than the rate for older workers, instead raising it in line with the rate for over-21s.

Confirming the wage increase, HM Treasury said: “To support low-paid workers across the UK, the government is raising the National Living Wage and National Minimum Wages, which is expected to benefit around 2.3 million workers.

“On 1 April 2027, the National Living Wage will increase by 3.9% to £13.21 per hour, equivalent to an increase of £910 in the gross annual earnings of a full-time worker on the National Living Wage.105 The National Minimum Wage for 18- to 20-year-olds will also increase by 3.9% to £11.27 per hour.

“By accepting the Low Pay Commission’s recommendations in full this year, the government is ensuring workers are rewarded fairly for their work, while protecting jobs, backing businesses, and strengthening the conditions for economic growth.”

The 3.9% increase is above the Consumer Prices Index (CPI) inflation rate, which the Office for National Statistics (ONS) confirmed as 3.5% in the 12 months to September 2026.

The Low Pay Commission (LPC), which advises the government on Minimum wage rises, said in April this year that the National Living Wage would need to increase by around 3.7% in 2027 to £13.18 an hour in order to keep up with how it expected average pay to rise.

In March, the government tweaked the commission's remit to ⁠give it more ​scope to take labour market conditions ​into account when setting the minimum wage for 18- to 20-year-olds.

While higher wages will come as a relief to millions of workers facing stretched budgets, financial experts have warned that the uplift will only go so far when there is still job insecurity.

Many businesses say they have been shedding more jobs and recruiting less because of increased labour costs, which has been showing up in the shrinking number of job vacancies in the economy.

Vacancies fell by 21,000 to 691,000 in the three months to September, according to the Office for National Statistics (ONS) estimates, marking the biggest decline since the start of the year and a new five-year low.

Tamsin Powell, consumer finance expert at Creditspring, said: “A higher minimum wage will be welcome news for workers whose budgets are stretched to the limit. Extra pay is felt first on the essentials: the food shop, energy bills and travel.

“But higher hourly pay only goes so far when work is insecure. Our research found that 16% of 18-24-year-olds lost their job in the past year, compared with 6% of over-55s, and almost one in five 25-34-year-olds lost hours. When income changes from month to month, it’s very hard to build any breathing room.”

She added: “The increase will bring important relief, but it needs to sit alongside more secure work and lower essential costs, so fewer households are pushed towards expensive last-minute borrowing.”