Ahead of the General Election in 2024, the Labour Party published its ‘Make Work Pay’ document. As well as a pledge that a Labour UK Government would ensure ‘the minimum wage is a real living wage that people can live on’ a key component was the commitment to ‘remove the discriminatory age bands to ensure every adult worker benefits’.
This is direct reference to the removal of the 18-20 age band:
- Where workers are paid the National Minimum Wage (NMW) of £10 per hour as opposed to;
- The higher National Living Wage (NLW) of £12.21 payable to workers aged 21 and over
In 2024, the UK Government reaffirmed its commitment to reducing the age of entitlement for the NLW to 18 and asked the Low Pay Commission (LPC) to recommend ’steps year by year in order to achieve a single adult rate’.
On 02 May 2025, as part of the annual consultation on the rates to be applied from April 2026, the LPC also included questions surrounding their document ‘Options for lowering the age of entitlement to the NLW to 18’. This outlined two ways in which the LPC could achieve the UK Government’s objective:
1. Reduce the age of entitlement by one age group at a time. So, in one-year NLW entitlement would be extended to 20-year-olds, then 19-year-olds, then 18-year-olds; or
2. Align the 18–20-year NMW rate with the NLW rate over several years. Therefore, depending on the number of years during the alignment process, the 18–20-year NMW rate would increase faster than the NLW until the two were equal
The consultation closed on 30 June 2025.
For Bookkeepers
For all employers and payroll professionals, the UK Government’s plans to reduce the age of entitlement to the (higher) National Living Wage (NLW) is one to keep an eye on. ICB believes there will be two challenges for employers:
1. The rising cost of employment as the UK Government gradually works towards a single adult rate; and, still
2. The complexity of navigating the NMW / NLW legislation
ICB will keep you abreast of the changes and we await the Low Pay Commission’s response to the consultation with interest.
