The new real Living Wage rates for 2026-27 have been announced, bringing a welcome pay increase for hundreds of thousands of workers across the UK. From October 2026, the independently calculated rates have increased to £14.10 per hour across the UK and £15.45 per hour in London, reflecting the continuing rise in everyday living costs.
Unlike the government’s National Living Wage, the real Living Wage is a voluntary rate based on what people need to meet the actual cost of living. It applies to employees aged 18 and over and is designed to help workers maintain a reasonable standard of living as household budgets continue to come under pressure.
What’s changed?
The latest announcement represents an increase of 65p per hour for both the UK and London real Living Wage rates. Employers accredited by the Living Wage Foundation now have until 1 May 2027 to implement the new rates, although organisations are encouraged to introduce the increase as soon as possible so employees can benefit sooner.
For employers already paying the real Living Wage, the announcement may prompt a review of payroll budgets, pay structures and salary differentials across the wider workforce. Those considering accreditation may also wish to assess the financial and operational impact of adopting the new rates.
Real Living Wage vs National Living Wage
The real Living Wage is often confused with the government’s National Living Wage, but the two are very different.
The National Living Wage is the legal minimum pay rate for workers aged 21 and over. It is set by the government following recommendations from the Low Pay Commission and takes into account factors such as economic conditions, employment levels and average earnings.
The Real Living Wage, however, is independently calculated each year using the actual cost of living. It considers everyday expenses including housing, food, transport and household bills. A higher rate is applied in London to reflect the capital’s higher living costs.
The difference between the two rates remains significant. Analysis from the Living Wage Foundation suggests that a full-time employee paid the new UK real Living Wage could earn more than £2,700 a year more than someone paid the statutory National Living Wage. In London, the annual difference exceeds £5,300.
Why are more employers choosing to pay it?
Nearly 17,000 businesses and organisations across the UK are now accredited Living Wage employers, with more than 490,000 workers benefiting from the higher hourly rates.
While accreditation is entirely voluntary, many employers report positive outcomes from paying the real Living Wage, including improved employee retention, higher engagement levels and enhanced employer reputation. At a time when recruitment and retention continue to be key challenges across many sectors, paying above the legal minimum can help businesses stand out in a competitive labour market.
What should employers do now?
If your organisation is accredited, now is the time to review your payroll arrangements and plan for implementation before the May 2027 deadline.
Even for businesses that are not accredited, the announcement provides an opportunity to review pay rates and consider how remuneration aligns with wider recruitment, retention and employee wellbeing objectives.
As living costs remain a key concern for many households, the latest increase is expected to provide a meaningful financial boost to workers and their families, helping to ease some of the pressures that continue to affect everyday budgets.
How PM+M can help
Changes to wage rates can have a knock-on effect on payroll processing, budgeting and wider workforce planning. If you’d like support reviewing your payroll arrangements or understanding the impact of pay increases on your business, our payroll team is here to help.
Get in touch with PM+M to discuss your requirements and ensure your payroll remains compliant, accurate and efficient.
