Understanding the difference between the government’s minimum wages and the Living Wage Foundation’s real Living Wage can be confusing, especially since the minimum wage for over 21s was renamed the “National Living Wage” back in 2016.
However, despite having similar names, both wage rates are set differently and have different outcomes for workers and employers. In this blog, we’ll dive into what sets them apart and why the distinction matters.
What is the Government's 'National Living Wage' and how does it differ from the National Minimum Wage in the UK?
The National Living Wage is set by the Government and only applies to workers aged 21 and over. The government’s Minimum Wage applies to younger workers who are between 18-20. This means that young people, many of whom are living away from home and working full-time, or studying at University and balancing part-time work, can still legally be paid just £10.85 per hour.
What is the Government's National Living Wage in 2026?
From 1st April 2026 the Government's National Living Wage will have increased to £12.71 an hour from £12.21 in 2025.
How is the National Living Wage calculated?
The National Living Wage is set by the government based on recommendations from the Low Pay Commission based on economic conditions, cost of living and median earnings. While it provides a basic income floor to protect workers, it still falls short of the real Living Wage, which is based directly on living costs.
What is the real Living Wage and how does it differ from other UK wage rates?
The Government’s National Living Wage is the legal minimum wage that all employers are required to pay to workers aged 21 and over.
The real Living Wage is a voluntary scheme that employers sign up to if they want to go beyond the government minimum to ensure their staff always earn enough to maintain a decent standard of living.
The real Living Wage is the only UK wage rate that's independently calculated based solely on the actual cost of living. It goes beyond basic minimums, enabling people to have choices, feel included in society and live with dignity.
The difference between the government minimum and the real Living Wage is now over £1,400 a year, which could pay for four months of food for a household, or three months of transport costs. The difference is over £4,000 for workers in London, which could pay for 13 months of food, or 13 months of transport costs. We know that it makes a massive difference to workers.
What is the real Living Wage for 2025-2026?
As of 22nd October 2025, the real Living Wage currently stands at £13.45 per hour across the UK and £14.80 per hour in London to reflect the city's higher living costs. It is paid by over 16,000 employers who want to ensure their staff can live with dignity and security.
We will announce the Living Wage rates for 2026-2027 in the Autumn of 2026.
The real life impact of the real Living Wage
Sam, Customer Account Executive at Thomas Kneale & Co, a Living Wage and Living Hours accredited textile manufacturer based in Manchester, said:
“Being paid the real Living Wage makes my life so much better. I don’t have to worry about whether I can pay this bill or that bill, cancel appointments because I can’t afford to get there, or be in and out of miserable rentals because I can’t afford anywhere better like I did when I was on a low-paid, zero hours contract in a previous job. Now I’m paid a real Living Wage and have secure hours at Thomas Kneale, I'm settled in a comfortable home, pay all my bills by direct debit and can go out and enjoy life with friends and family. I'm free to live on my own terms, not caught in the trap of having no money.”
The History of the real Living Wage
The Living Wage movement first started in 2001, when community groups in East London, working alongside Citizens UK, began campaigning for wages that reflected real living costs. In 2011, the Living Wage Foundation was established to promote and recognize employers who voluntarily pay the real Living Wage. In 2016, the government introduced its “National Living Wage” for workers aged 23 and above (now extended to 21+). However, only the real Living Wage is based directly on living expenses. You can read more about the history of the movement on our History page.
Despite the huge impact of the Living Wage movement , there are still 4.4 million workers across the UK paid below the real Living Wage – one in seven roles. Research by the Living Wage Foundation found that almost 6 in 10 (59%) of low paid workers skipped meals, turned off the heating, fell behind on bills or took out a pay-day loan in the past year to cover essentials. The research also found that two in five workers earning below the real Living Wage have used a food bank in the past year. You can read more about the research here.