NLW Is In Force Today — Is Your Payroll Already Non-Compliant?

The National Living Wage rose to £12.71_CORRECTED on 1 April 2026. If you employ anyone paid at or near minimum wage and your payroll hasn't been updated today, you are already non-compliant. HMRC can fine you up to 200% of the underpaid amount — capped at £20,000 per worker — and name your business publicly. The Fair Work Agency launches in six days with expanded enforcement powers to make sure this sticks.

This post covers exactly what changed, who is affected, what the penalties look like, and how to fix it before it becomes a problem.

What changed on 1 April 2026
Who is affected
HMRC's penalty structure — the numbers
Fair Work Agency: the new enforcement reality from 7 April
Steps to check your payroll today
How ComplianceAlert keeps you ahead of changes like this

What Changed on 1 April 2026

The government's annual National Living Wage and National Minimum Wage uplifts took effect at midnight. The new rates are:

Worker Category	Old Rate	New Rate (April 2026)
National Living Wage (21+)	£11.44/hr	£12.71/hr
Age 18–20	£8.60/hr	£10.00/hr
Age 16–17	£6.40/hr	£7.55/hr
Apprentice	£6.40/hr	£7.55/hr

The NLW increase of £0.77 per hour is one of the largest cash uplifts in recent years. For a full-time worker (37.5 hours/week), that's an extra £28.88 per week, or roughly £1,500 per year. Across a team of five on minimum wage, you're looking at an additional payroll cost of around £7,500 annually.

That's a significant number — but it's also a legal floor. Pay below it and HMRC will come looking.

Who Is Affected

If you employ anyone in the UK and pay them at or close to the previous minimum rates, you need to act now. The sectors most commonly caught out include:

Hospitality — bar staff, kitchen porters, waiting staff often paid at minimum wage
Retail — shop floor staff, warehouse operatives, delivery drivers
Social care and residential care homes — care assistants frequently on NLW rates
Construction — groundworkers, site operatives, apprentices
Cleaning and facilities management — cleaners, security staff
Agriculture and food processing — seasonal workers, packing operatives

One common trap: workers paid slightly above the old NLW may now fall below the new floor. If you last reviewed rates in January or February, check whether any workers are now underpaid by the £0.77 gap.

HMRC's Penalty Structure — The Numbers

HMRC enforces NMW/NLW compliance through its National Minimum Wage team. The penalty structure is deliberately steep:

Arrears recovery: HMRC will calculate the full amount of underpayment, going back up to six years
Financial penalty: 200% of total underpayment, reduced to 100% if paid within 14 days
Cap per worker: Up to £20,000
Naming scheme: Businesses with arrears above £500 per worker are named publicly on the HMRC website

In 2024–25, HMRC identified arrears of over £16.7 million owed to more than 155,000 workers. Over 524 employers were publicly named. Small businesses were disproportionately represented — many were caught not through deliberate evasion but through simple payroll oversight after a rate change.

Today is that rate change. The clock is running.

Not sure if your business is compliant right now? Take our free 3-minute Compliance Score quiz at compliancealert.co.uk/compliance-score — instant results, no sign-up required.

Fair Work Agency: The New Enforcement Reality from 7 April

The NLW increase lands six days before the Fair Work Agency (FWA) launches on 7 April 2026. The FWA replaces three separate enforcement bodies:

The HMRC National Minimum Wage team
The Employment Agency Standards Inspectorate
The Gangmasters and Labour Abuse Authority

Bringing these together means coordinated, cross-department enforcement. Under the old structure, employers sometimes slipped through gaps between agencies. The FWA closes those gaps. It has wider powers to investigate wage theft, holiday pay underpayment, and sick pay compliance — all in a single inspection.

The FWA has specifically flagged hospitality, retail, and agriculture as priority sectors for 2026. If you operate in one of these sectors and your payroll is still running at the old NLW rate when FWA inspectors start work, the timing could not be worse.

Steps to Check Your Payroll Today

Here is a practical checklist to work through today:

1. Pull your payroll data List every worker paid at or near the old NLW (£11.44/hr). Flag anyone earning between £11.44 and £12.71.

2. Update rates in your payroll software Most payroll platforms (Xero, Sage, QuickBooks, BrightPay) have updated their defaults — but you may need to apply the change to existing employee records manually. Do not assume it auto-updated.

3. Check hourly workers specifically Salaried workers are straightforward. Hourly workers are where errors creep in. Divide monthly salary by hours worked to verify the effective hourly rate.

4. Review apprentices and under-21 workers separately Each age band has its own rate. An apprentice in their second year who has turned 19 moves to the 18–20 rate, not the apprentice rate.

5. Calculate arrears risk If payroll ran at the old rate today (1 April), calculate the underpayment per worker for hours worked since midnight. If it's been running incorrectly for days, HMRC can request records — document your correction immediately.

6. Brief your manager or payroll provider If you use an external payroll bureau, confirm they have applied the uplift. Do not assume.

How ComplianceAlert Keeps You Ahead of Changes Like This

The NLW uplift was announced in the October 2024 Budget and confirmed months ago. ComplianceAlert subscribers in hospitality, retail, and care received alerts about this change in November 2024 — with a reminder in March as the April deadline approached. They had time to plan, update payroll, and absorb the cost increase.

If you found out about this today — from a news alert, a social media post, or this article — you're already in reactive mode. That's not where you want to be when HMRC is the other party.

ComplianceAlert monitors over 200 UK regulators and sends plain-English alerts whenever a change affects your sector. No legal jargon. No generic newsletters. Just the specific regulation, the deadline, and what you need to do.

Start your free 7-day trial at compliancealert.co.uk — no credit card required. Or ask Alice exactly what compliance changes apply to your business this week.

TL;DR

NLW is £12.71_CORRECTED, 1 April 2026 — any payroll still running at the old rate is non-compliant
HMRC penalties: up to 200% of underpayment, up to £20,000 per worker, public naming above £500 arrears
The Fair Work Agency launches 7 April with enhanced cross-agency enforcement powers
Check your payroll today: update rates, review hourly workers, verify with your payroll provider
ComplianceAlert sends alerts like this before they become urgent — 7-day free trial, no card required

Published 1 April 2026. Sources: HMRC NMW enforcement statistics 2024–25, Low Pay Commission April 2026 recommendations, Fair Work Agency launch guidance.