HMRC Minimum Wage Campaign 2026: New Rates, Fair Work Agency Rules and Your Rights
The HMRC minimum wage campaign is HM Revenue and Customs’ ongoing programme of letters, employer support calls and targeted audits designed to identify and correct underpayment of the National Minimum Wage.
As of April 2026, the campaign runs alongside new pay rates and a transfer of enforcement powers to the Fair Work Agency.
Key takeaways
- From 1 April 2026, the National Living Wage for workers aged 21 and over rose to £12.71 an hour, a rise of 4.1%.
- HMRC’s minimum wage enforcement powers transferred to the newly created Fair Work Agency on 7 April 2026.
- Employers who underpay the National Minimum Wage face penalties of up to 200% of the arrears owed, capped at £20,000 per worker.
What Is the HMRC Minimum Wage Campaign?
HMRC’s minimum wage campaign is a structured programme of education, letters and enforcement action rather than a single event.
HMRC uses this geographical compliance approach to reach employers, workers and agents in specific regions or sectors, sending correspondence that explains National Minimum Wage rules and, in some cases, requesting a support call before any formal audit begins.
The National Minimum Wage Act 1998 sets the legal foundation for these obligations. HMRC treats most breaches as the result of misunderstanding rather than deliberate underpayment, which is why the campaign leads with education.
This approach gives employers a genuine chance to correct mistakes before penalties apply, and HMRC has run it across multiple UK regions since it began.
How the Campaign Reaches Employers? From Letter to Support Call
HMRC generally works through a defined sequence when contacting employers in a targeted area or sector.
- HMRC sends an initial letter, often called a nudge letter, explaining National Minimum Wage rules and common risk areas.
- A smaller pool of employers receives a follow up letter inviting them to book a free Employer Support Call.
- During the call, HMRC discusses specific risk areas and encourages the employer to review payroll practices voluntarily.
- Employers who do not engage are more likely to be selected for a formal compliance audit.
- Where a formal audit finds underpayment, HMRC can pursue arrears going back up to six years from the date a notice is issued.
Employers who respond early avoid most of the reputational and financial risk that a formal audit carries. Skipping the support call does not remove the obligation to comply, it simply removes the chance to correct issues on their own terms.
National Minimum Wage and National Living Wage Rates for 2026
The National Living Wage rose to £12.71 an hour for workers aged 21 and over from 1 April 2026, an increase of 4.1% recommended by the Low Pay Commission. Younger workers and apprentices also received increases, with the 18 to 20 rate rising by 8.5% to £10.85.
Widely circulated claim: Minimum wage workers received a 3.5% pay rise in 2026.
Correct position: That figure describes an Australian Fair Work Commission wage review and does not apply in the UK. According to the Low Pay Commission, the UK’s National Living Wage rose by 4.1% in April 2026, taking the rate to £12.71 an hour.
| Age group | Rate from 1 April 2026 |
|---|---|
| 21 and over, National Living Wage | £12.71 |
| 18 to 20 | £10.85 |
| Under 18 | £8.00 |
| Apprentice, first year or under 19 | £8.00 |
| Accommodation offset, per day | £11.10 |
Rates change every April following recommendations from the Low Pay Commission, so payroll systems need updating each spring.
Who Enforces the Minimum Wage? HMRC and the New Fair Work Agency
Since 7 April 2026, the Fair Work Agency has led minimum wage enforcement in place of HMRC acting alone.
The Fair Work Agency, established under the Employment Rights Act 2025, brings together HMRC’s National Minimum Wage enforcement team, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority into one regulator with a broader remit.
This new body can carry out workplace inspections, demand payroll records and issue civil penalties, and its investigations now extend beyond pay into holiday entitlement and labour exploitation. This gives enforcement a wider reach than HMRC’s minimum wage team held on its own.
This joined up approach to compliance extends beyond wages. DWP has tightened its own oversight in a similar way, with the DWP benefit fraud crackdown measures applying comparable data matching techniques to the welfare system.
Common Reasons Employers Fall Foul of the Campaign
Most National Minimum Wage breaches happen without any intention to underpay. The same handful of payroll compliance errors tends to recur across sectors and business sizes.
- Salary sacrifice deductions, including pension contributions, reducing take home pay below the legal minimum
- Deductions for uniforms, tools or training costs that are not reimbursed
- Unpaid time spent on mandatory training, travel between sites or preparation before a shift begins
- Applying the apprentice rate after a worker has completed their first year
- Rounding down hours on automated time and attendance systems
A single overlooked deduction can be enough to breach the National Minimum Wage Regulations 2015, even when the hourly rate on paper looks correct. Regular payroll reviews are the most reliable way to catch these issues early.
What to Do If You Receive an HMRC Nudge Letter?
There is no legal requirement to respond to a nudge letter, but ignoring one raises your risk of a formal audit. Take the following steps if you receive one.
- Read the letter carefully and note any deadline for booking a support call.
- Review your payroll for the risk areas HMRC lists, especially deductions and apprentice rates.
- Speak to your accountant or payroll provider before contacting HMRC.
- Correct any underpayment you find and keep a clear record of the steps you took.
- Book the free Employer Support Call if you want direct clarification from HMRC.
Acas offers free and confidential advice on pay and employment rights if you want guidance outside of HMRC itself. Acting before HMRC opens a formal review is the clearest way to avoid penalties and public naming.
The April 2026 Compliance Squeeze: Why Rate Changes and New Enforcement Collide
Two significant changes landed in the same week in April 2026, and the two are easy to treat as unconnected. Updating hourly rates for 1 April is a separate task from registering the Fair Work Agency’s launch on 7 April on paper, but in practice both dates form a single compliance window.
The rate change itself is rarely the problem, since most payroll software updates automatically. The real risk lies in assuming that once the new rate is loaded, the job is finished.
Enforcement now sits with a larger, better resourced body that inherited investigative powers from three separate organisations, and payroll accuracy at the point of a rate change is a natural starting point for its checks.
Two dates, six days apart, define this risk window each year: new pay rates take effect on 1 April, and Fair Work Agency enforcement powers took hold from 7 April 2026. Employers who update systems for the first date but overlook the second face a compounded compliance risk.
How to Check You’re Being Paid Correctly?
The fastest way to check if you’re being paid the minimum wage is to use GOV.UK’s National Minimum Wage and Living Wage calculator. Answer a short set of questions about your age, hours and any deductions, and the tool tells you whether your employer owes you money from the current or previous year.
If the calculator flags a shortfall, raise it with your employer directly before escalating further. Most shortfalls are unintentional and are usually corrected quickly once flagged.
Government checks of this kind are not limited to pay. DWP applies similar scrutiny on the benefits side, using DWP Universal Credit bank account checks to verify income and savings information reported by claimants.
Minimum Wage Pay and Your Benefits Entitlement
An increase in the National Living Wage can change how much Universal Credit a worker receives, since higher earnings reduce the award under the earnings taper. Workers who receive a pay rise in April should expect their next Universal Credit payment to adjust automatically.
The Department for Work and Pensions reviews benefit rates and thresholds on a similar annual cycle to HMRC’s wage updates, most recently through the DWP benefit review 2026/27.
Checking both changes together gives workers a clearer picture of their actual household income for the year ahead, rather than looking at a payslip in isolation.
Penalties, Naming and Shaming, and Wider HMRC Enforcement
Underpaying the National Minimum Wage carries penalties of up to 200% of the arrears owed, capped at £20,000 per worker. HMRC can also publish the names of non compliant employers, a step that carries reputational risk well beyond the financial penalty itself.
In March 2026, HMRC published its latest enforcement round, naming more than 385 employers who had underpaid workers. Together they were ordered to repay over £7.3 million in arrears to around 60,000 workers and faced a further £12.6 million in financial penalties.
National Minimum Wage enforcement is one part of a much wider pattern of HMRC compliance activity.
For the most serious cases involving deliberate concealment rather than payroll error, HMRC’s response can escalate as far as the dawn raids seen in serious HMRC dawn raid tax evasion UK cases, though the vast majority of minimum wage breaches never reach that level.
Conclusion
HMRC’s minimum wage campaign now works alongside the Fair Work Agency, higher 2026 rates and tougher penalties for employers who underpay their staff.
Workers should check their pay against the current rate, and employers should treat any HMRC letter as a genuine opportunity to correct mistakes early. The HMRC minimum wage campaign means stricter, more coordinated enforcement for UK employers and workers in 2026.
FAQ
How much will the minimum wage be in April 2026?
The National Living Wage for workers aged 21 and over is £12.71 an hour from 1 April 2026, a rise of 4.1%. Workers aged 18 to 20 receive £10.85, and under 18s and most apprentices receive £8.00 an hour.
Do HMRC enforce minimum wage?
Yes. HMRC enforces the National Minimum Wage together with the Fair Work Agency, which took over lead responsibility for compliance action from 7 April 2026. HMRC can still investigate and recover arrears, but civil penalties and workplace inspections now sit within the wider Fair Work Agency framework.
What pay rise are minimum wage workers getting in 2026?
Minimum wage workers aged 21 and over received a 4.1% pay rise in April 2026, taking the National Living Wage to £12.71 an hour. This figure comes from the Low Pay Commission and applies across the UK, not the unrelated 3.5% increase reported in Australia around the same time.
How much is 40 hours a week minimum wage in the UK?
A worker aged 21 or over on the National Living Wage earns £508.40 for a 40 hour week before tax, based on the £12.71 hourly rate from April 2026. Actual take home pay depends on tax, National Insurance and any pension contributions.
Can I report my employer to HMRC anonymously?
Yes. Workers can report suspected underpayment to HMRC anonymously using the online pay and work rights complaint form, even if they no longer work for the employer. Reports can also be made on behalf of another person who feels unable to report it themselves.
This article is for general information only and does not constitute financial, tax or legal advice.
