National Minimum Wage 2026: Accommodation Offset and Under-18 Rates

National Minimum Wage rates from April 2025

The UK has a tiered National Minimum Wage system with different rates by age and status. The highest tier — the National Living Wage (NLW) — applies to workers aged 21 and over. The age threshold was lowered from 23 to 21 in April 2024.

The government accepts the Low Pay Commission's (LPC) recommendation on NMW rates each autumn, with the new rates taking effect from 1 April. The LPC targets the NLW at two-thirds of median earnings for workers aged 21+. Exact 2026/27 rates will be confirmed in the Autumn Budget 2025.

Who the apprentice rate applies to

The apprentice rate (£6.40/hour) applies only to:

• Apprentices under 19 years old, OR
• Apprentices aged 19 or over who are in the first year of their apprenticeship

Once an apprentice turns 19 and has completed their first year, they are entitled to the minimum wage rate for their age group (at least £10.00/hour if 19–20, or £12.21/hour if 21+).

School leaving age

The under-18 NMW rate applies to those who are above school leaving age (16) but under 18. Workers below school leaving age are not entitled to NMW, but must still receive a lawful wage.

How the accommodation offset works

When an employer provides accommodation to a worker — for example, a live-in housekeeper, farm worker, hotel employee, or pub manager — the employer may charge rent. However, HMRC rules limit how much of that rent charge can be counted when assessing whether the worker is receiving at least the National Minimum Wage.

The accommodation offset is the maximum daily deduction that can be made without counting against NMW compliance.

Accommodation offset rate (2025/26): £10.66/day

This means an employer can deduct up to £10.66 per day for accommodation, and this deduction is effectively "invisible" to the NMW calculation. Any deduction above £10.66/day reduces the worker's effective hourly pay for NMW purposes.

Worked example

Scenario: An employer provides a live-in housekeeper with a room seven days per week and deducts rent from their pay.

The effective hourly rate for NMW purposes = £488.40 ÷ 40 = £12.21/hour. The accommodation deduction is within the permitted offset, so no NMW breach.

What happens if deductions exceed the offset?

If the employer deducts more than the offset — say £100/week — the excess (£100 − £74.62 = £25.38) counts as a wage reduction:

Effective gross for NMW = £488.40 − £25.38 = £463.02 Effective hourly rate = £463.02 ÷ 40 = £11.58/hour

This is below NMW (£12.21), so the employer is in breach.

Other deductions that affect NMW

Beyond accommodation, certain other deductions reduce effective pay for NMW purposes:

• Uniforms and clothing the worker must purchase (not reimbursed by the employer): reduces effective pay.
• Tools and equipment the worker must provide: reduces effective pay.
• Transport to/from work: if the worker must pay for transport to access the work (not general commuting), this can reduce effective pay.

The following do not affect the NMW calculation:

• Employer pension contributions — not pay, not counted.
• Tips and gratuities paid through a tronc (pooled tips arrangement): excluded from NMW since October 2024 legislation.
• Expense reimbursements: actual reimbursement of genuine costs is not pay.

Tips legislation: the Employment (Allocation of Tips) Act 2023

From October 2024, all tips, gratuities, and service charges must be passed to workers in full. Employers cannot retain tips. However, tips do not count towards NMW compliance — the NLW must be met through basic pay alone.

Employer obligations and record-keeping

Employers must:

1. Pay at least the correct NMW rate for each worker's age band.
2. Keep records of hours worked and wages paid sufficient to show NMW compliance — for at least six years.
3. Not make unlawful deductions that push pay below NMW.
4. Inform workers of their NMW entitlement.

HMRC enforcement

HMRC's NMW enforcement teams carry out compliance checks, including inspections of payroll records. If an underpayment is found:

• Arrears must be paid using the current NMW rate (not the historic rate when the breach occurred — this often means greater arrears if rates have risen).
• Civil penalty of up to 200% of the arrears, capped at £20,000 per worker.
• Naming in HMRC's public register of NMW non-compliant employers.

Workers who believe they are being underpaid can contact ACAS, Citizens Advice, or report directly to HMRC via the HMRC NMW complaints service.

Workers not covered by NMW

A small number of categories are excluded:

• Self-employed workers — NMW applies only to workers and employees (employment status test).
• Company directors who do not have a contract of employment (volunteer directors).
• Unpaid work experience placements of no longer than 4 weeks in limited circumstances.
• Volunteers for charities and non-profits (genuine volunteering, not work disguised as volunteering).
• Students on mandatory work placements of up to one year as part of a UK or overseas course.