Last updated: 14 October 2026
Is there a problem with the minimum wage rules?
The main problem for employers is that it’s easy to underpay without meaning to. HMRC enforces the National Minimum Wage and National Living Wage, and each year it names employers who have underpaid. Common causes are deductions from pay for uniforms or training, unpaid time such as security checks or training, salary sacrifice taking pay below the minimum, and missing a rate rise on 1 April. If you underpay, you must pay back arrears at current rates plus a penalty of up to 200% of the arrears, and you may be publicly named.
Rates from 1 April 2026
| Age or category | Hourly rate |
| National Living Wage (21 and over) | £12.71 |
| 18 to 20 | £10.85 |
| Under 18 | £8.00 |
| Apprentice (under 19 or first year) | £8.00 |
Common causes of underpayment
- Deductions for uniform or equipment that take pay below the minimum
- Unpaid working time, such as training, travel between jobs, opening up and closing down
- Salary sacrifice schemes, which can’t reduce pay below NMW
- Salaried workers whose annual salary doesn’t cover all hours worked
- Late rate changes, such as a birthday moving a worker into a higher band
- Apprentice rate misuse after the first year for apprentices over 19
Example
A café pays its 22-year-old barista £12.71 an hour for 30 hours a week. It deducts £10 a week for a branded uniform she must wear. This takes her pay to £12.38 an hour, below the National Living Wage. HMRC finds the error in an inspection. The café must repay the arrears for each affected week at the current rate, pay a penalty, and may be named.
Salaried hours work
For salaried workers, average pay over the pay reference period must cover the basic hours. If they regularly work extra unpaid hours, the effective hourly rate can fall below the minimum. Keep records of actual hours.
Penalties and naming
- Arrears at current rates
- Penalty of 200% of arrears (halved if paid within 14 days), between £100 and £20,000 per worker
- Public naming for arrears over £500
- Criminal prosecution in serious cases
Self-employed and directors
The minimum wage doesn’t apply to genuinely self-employed contractors or to company directors without an employment contract. Volunteers and family members living in the employer’s home are also excluded.
Common mistakes
- Missing the April increase
- Deductions for uniforms or tools
- Not paying for training time
- Using apprentice rates after the first year for over-19s
Records to keep
Keep timesheets, pay rates and payslips for 6 years, as HMRC can claim arrears back that far.
Accommodation provided to staff
If you provide accommodation, only a limited daily amount, the accommodation offset, can count towards minimum wage pay. Charging more than the offset for rent reduces pay for minimum wage purposes, so check the current offset rate each April alongside the hourly rates.
Frequently asked questions
Do tips count towards NMW?
No.
Can I pay for a uniform out of wages?
Only if pay stays above the minimum.
Do interns get NMW?
Usually, if they’re workers.
How far back can HMRC go?
Up to 6 years.
Related: summer jobs for under-18s, work experience payments and statutory sick pay for injured staff.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with minimum wage compliance. See our payroll services service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
