Millions of Britain’s lowest-paid workers are set for a 4% pay rise from April, handing a typical full-time employee around £900 more a year.

Ministers have flagged up the rise as part of a wider cost-of-living package, which includes frozen rail fares and lower energy bills.

The increase applies to both the National Living Wage (NLW) and the National Minimum Wage (NMW), benefiting an estimated 2.7 million workers across the UK.

The National Living Wage is the highest tier of the minimum wage and applies to workers aged 21 and over.

Younger workers and apprentices are paid under the National Minimum Wage, which has lower age-banded hourly rates.

All rates will rise by around 4% from April, according to the Government.

Here’s how the hourly rates are set to change

The annual increase is equivalent to £900 a year for someone on the National Living Wage. For a full-time worker on the National Living Wage, that means an increase in pay of £900 a year. And for someone on the National Minimum Wage, working full time, it will mean a £1500 increase.

Based on current rates, the increases mean:

• National Living Wage (21 and over) is rising from £12.21 an hour to £12.71
• National Minimum Wage (18–20) is increasing from £10.00 to £10.85
• National Minimum Wage (16-17 and apprentices) is rising from £7.55 per hour to £8.00

For a full-time worker aged 21 or over, this increase translates to an extra £900–£975 annually before tax, depending on hours worked.

Workers can check which rate applies to them here.

Ministers say the increases are designed to “raise living standards”, though critics warn that higher taxes and stubborn inflation risk eating into the gains.

State Pension rises by 4.8%

Pensioners are also in line for an above-inflation boost, with the New State Pension rising by 4.8% from April 2026.

That lifts payments to £241.30 a week, or £12,547.60 a year.

Energy bills cut by £150

From April 2026, households will see an average £150 reduction in energy bills, delivered as a 100% saving on certain policy costs, according to the Cabinet Office.

This comes on top of the Warm Home Discount, worth another £150, taking total support to £300 for eligible households.

Details are available here.

Universal Credit and childcare changes

The Government will also remove the two-child limit on Universal Credit from April 2026, extending support to all children in a household – a change ministers say could reduce child poverty by hundreds of thousands.

Working parents will also be eligible for up to 30 hours of funded childcare, potentially cutting annual childcare costs by up to 100% of £7,500 for some families.

Free school breakfasts expanded

Finally, free breakfast clubs are being rolled out to 100% of primary schools in England, a move ministers say could save parents up to £450 a year while improving attendance and behaviour.

Rail fares frozen – a rare move

Alongside higher pay, the Government has confirmed a 100% freeze on regulated rail fares for 2026, the first such move in 30 years.

The freeze covers season tickets, commuter fares and off-peak returns, affecting more than 1 billion journeys across England and parts of Wales.

Officials estimate a typical commuter travelling three days a week using flexi-season tickets could save around 10–15% a year, equivalent to £315 on some routes.

Prescription charges frozen

Prescription charges in England will remain below £10, representing a 0% increase for 2026, with exemptions and prepayment certificates unchanged.

Ministers say the freeze is aimed at ensuring patients do not cut back on vital medication because of cost.