In April, the minimum wage for 18 to 20-year-olds went up 8.5%, to £10.85 an hour. For everyone aged 21 and over it went up 4.1%, to £12.71.
The difference is deliberate. The government wants a single adult minimum wage from age 18, and the youth rate is being walked up towards it a step at a time. Two years ago, an 18-year-old’s minimum was 75% of the adult rate. Today it’s 85%.
If you run a café, a pub, a shop or a site where young people get their first job, that lands straight on your wage bill. So here’s what a young employee costs you now, the National Insurance relief a lot of employers overlook, the birthday that catches employers out, and the debate over whether this is the right direction. At the end, I’d like to know where you land.
The Rates, Two Years On
| Minimum hourly rate | April 2024 | April 2025 | April 2026 |
|---|---|---|---|
| 21 and over (National Living Wage) | £11.44 | £12.21 | £12.71 |
| 18 to 20 | £8.60 | £10.00 | £10.85 |
| 16 to 17, and apprentices | £6.40 | £7.55 | £8.00 |
| 18–20 rate as a share of the adult rate | 75% | 82% | 85% |
Over those two years the 18–20 rate is up 26%, against 11% for the adult rate. (The apprentice rate applies to apprentices under 19, and to older apprentices in the first year of their apprenticeship.)
What a Young Employee Really Costs You
Take a typical hospitality rota: 16 hours a week, evenings and weekends, the kind of hours a student fits around college or university. Here’s the yearly cost to you of a 19-year-old and a 25-year-old working exactly the same shifts at the minimum rate.
| 16 hours a week, 52 weeks | 19-year-old | 25-year-old |
|---|---|---|
| Wages, 2024/25 | £7,155 | £9,518 |
| Employer NI, 2024/25 | £0 | £58 |
| Total cost, 2024/25 | £7,155 | £9,576 |
| Wages, 2026/27 | £9,027 | £10,575 |
| Employer NI, 2026/27 | £0 | £836 |
| Total cost, 2026/27 | £9,027 | £11,411 |
| Rise over two years | 26% | 19% |
Two things stand out.
The first is that the younger worker’s cost has risen faster — 26% in two years against 19% — which is exactly what the policy is designed to do.
The second is the National Insurance line. Employers pay no National Insurance on employees under 21, as long as they earn under £50,270 a year (£967 a week). In payroll terms they sit on category letter M, which carries a 0% employer rate up to that point. The 25-year-old costs you 15% on everything they earn above £5,000 a year. The 19-year-old costs you nothing on top of their wages.
That’s why the gap in what they cost you is wider than the gap in what they’re paid. On the hourly rate, the 19-year-old is about 15% cheaper. On total cost, they’re about 21% cheaper on this rota, and about 24% cheaper full-time. It’s also why last year’s employer National Insurance rise hit older part-timers hard (the 25-year-old’s bill went from £58 to £836) while leaving under-21s untouched.
Worth a two-minute check: open your payroll and look at the National Insurance category letter for every employee under 21. It should be M, or H for apprentices under 25. If it’s A, you’re paying employer National Insurance you don’t owe. It’s an easy slip when someone is set up in a hurry, and it can usually be put right, including for earlier pay periods. While you’re there, check the letter moves to A when they turn 21 (or 25, for apprentices).
One caveat. If your business claims the Employment Allowance, up to £10,500 a year comes off your employer National Insurance bill. If your whole bill sits below that, you’re not paying employer NI on anyone in practice, and the gap between a 19-year-old and a 25-year-old really is just the 15% in the hourly rate. For bigger teams, where the allowance runs out, the relief on under-21s is real money.
The Cost Jump Comes on Their 21st Birthday
The rise that catches employers out isn’t the one in April. It’s the one on a birthday.
When a 20-year-old on that 16-hour rota turns 21, two things happen together: their minimum rate jumps 17%, from £10.85 to £12.71, and employer National Insurance starts. Their yearly cost to you goes from £9,027 to £11,411 — up 26%, for the same person doing the same shifts. On 37.5 hours a week, it goes from £21,158 to £27,752, a rise of 31%.
So treat 21st birthdays the way you treat April. Know when each of your young team turns 21, and have it in the budget before it arrives.
This is also where the policy is heading. Under the path the Low Pay Commission set out last November, the full adult rate would extend to 20-year-olds in April 2027, and to 18 and 19-year-olds in 2028 or 2029, subject to economic conditions. If that holds, the wage part of the jump moves earlier. The National Insurance relief for under-21s is a separate rule and isn’t part of that plan.
Fairer Pay, or Fewer First Jobs?
This is where it gets harder, because both sides have a fair point.
The case for closing the gap. Same job, same pay. A 20-year-old pulling pints on a Friday night does the same work as the 25-year-old beside them, and plenty of 20-year-olds have been working in hospitality since they were 16. Young people pay the same rent, the same bus fare and the same food shop as everyone else, and many aren’t living at home. A lower rate based only on date of birth is a blunt way to price experience, and hard to defend on fairness.
The case for caution. The youth rate was there for a reason: to reflect the training time and the risk of taking on someone with no track record. As that discount shrinks, so does the incentive to give a first job to someone new rather than someone who already knows the work. And the backdrop isn’t encouraging. The latest ONS figures show 981,000 young people aged 16 to 24 were not in education, employment or training in April to June 2026 — 13.0% of that age group, and 30,000 more than a year earlier.
The government is holding both thoughts at once. Its remit to the Low Pay Commission keeps the aim of removing the age bands, but gives the commission full flexibility over the pace and timing, with priority on younger workers’ job prospects. Alan Milburn’s government-commissioned review of young people and work flagged the recent rises in employer National Insurance and the youth minimum wage as potential barriers to hiring in its interim report in May. In early September he hinted that his final report, due this autumn, could recommend changes to the plan.
Better pay for young people in work. Possibly fewer young people in work. Which of those matters more is a judgement call, and it’s the reason I wanted to write this.
What’s Coming Next
The Low Pay Commission’s recommendations for the April 2027 rates are expected later this autumn. The question for anyone employing young people is whether 20-year-olds move onto the full adult rate next April, as the current path suggests, or whether the timetable slows. Milburn’s final report is expected around the same time.
Either way, April 2027 will almost certainly bring another rise. The time to work out what it does to your margins is now, not in March.
If You Employ Young People: Five Things to Do Now
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Check your NI category letters
Under-21s should be on M, apprentices under 25 on H. Anyone in those groups on A is costing you employer National Insurance you don’t need to pay.
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Put 21st birthdays in the diary
Budget for the jump in cost before it lands. If the Low Pay Commission’s path holds, add 20th birthdays from April 2027.
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Model April 2027 now
Run your staff costs on two scenarios: 20-year-olds on the adult rate, and not. If the first one squeezes your margin, you want to know before you set next year’s prices, not after.
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Look again at apprenticeships
The apprentice minimum is £8.00 an hour for under-19s and first-year apprentices, and there’s no employer National Insurance on apprentices under 25 earning up to £50,270. For the right role, it’s a structured way to take someone on and train them.
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Make sure you’re claiming the Employment Allowance
Up to £10,500 a year off your employer National Insurance bill. It isn’t automatic — it has to be claimed through payroll for each new tax year — and a limited company whose only employee paid above the threshold is its director can’t claim it.
Have Your Say
I’d like to hear from anyone this affects, and especially from anyone who hires at this age. Has the rise changed who you take on? Would you still give a first job to a 19-year-old if they cost the same as a 25-year-old? It takes a minute, and it’s anonymous unless you want a reply.
Prefer to say it in public? Join the conversation on LinkedIn or Facebook.
Payroll that gets the detail right
Minimum wage and National Insurance rules change every April, and the age bands move on every employee’s birthday. As your ICAEW Chartered Accountant, here’s how we keep on top of it for you:
- Payroll run properly — the right rate from the right pay period, and the right NI category letter for everyone on it
- Birthdays flagged early — so a 21st doesn’t arrive as a surprise on the wage bill
- Staff costs modelled before April — what the next rise does to your margins, while there’s still time to plan
- Every relief checked — the Employment Allowance, and the under-21 and apprentice National Insurance reliefs
- Sector know-how — hospitality and construction, where a lot of first jobs start
This post is intended as general guidance only. Figures are correct at 11 September 2026. Worked examples assume 52 weeks’ pay at the minimum hourly rate and exclude workplace pension contributions and the Employment Allowance. Always seek specific advice tailored to your own circumstances and refer to the latest HMRC guidance.
Sources: GOV.UK minimum wage rates; GOV.UK rates and thresholds for employers 2026 to 2027; Low Pay Commission recommendations, November 2025; Low Pay Commission remit 2026; ONS, young people not in education, employment or training, August 2026; GOV.UK Employment Allowance guidance; Centre for Cities on the Milburn review interim report; Bloomberg, 8 September 2026.
