Nearly 400 businesses across the UK have been fined a combined £12.6m for failing to pay staff the correct minimum wage, with a further £7.3m ordered in back payments to around 60,000 underpaid workers.

The UK government has announced the enforcement action this month (March 2026), just weeks before statutory pay rates rise again across all age groups in April.

SMEs continue to face cost pressures globally

This timing is definitely not what SMEs wanted to hear since it adds additional pressure to those already calculating the cost of the upcoming increases.

From April, workers aged 21 and over will be entitled to £12.71 an hour under the National Living Wage, up from £12.21. This is an additional £900 a year for each full-time employee, potentially making a dent in what might be already dwindling profits in the current state of the economy.

The rate for 18 to 20-year-olds rises by 8.5% to £10.85, adding roughly £1,500 annually per full-time worker, while the under-18 and apprentice rate increases 6% to £8 an hour.

For businesses running lean payrolls across multiple age bands, the cumulative effect of simultaneous increases across three separate rate tiers could be considerable. A small café employing a mix of workers aged 17, 19 and 25 on full-time hours, for example, faces a compounding wage bill increase that may not be fully realized until payroll is recalculated.

The enforcement data suggests HMRC is actively pursuing non-compliance rather than relying on businesses to self-correct. Among the 389 employers named in the March 2026 action were nursery chain Busy Bees, Norwich City Football Club, Hays Travel and Costa Coffee.

The Living Wage Foundation, which oversees a separate voluntary rate, noted that its benchmark already stands well above the legal floor.

At £13.45 an hour nationally and £14.80 in London, the voluntary Real Living Wage is worth £2,418 more per year than the statutory minimum outside the capital and £5,050 more within it. Around 500,000 workers across more than 16,500 firms currently receive it.

Small and medium business with younger workers could see further tax hikes

What could be more detrimental later down the line is that the government has indicated it intends to eventually consolidate the 18 to 20 rate and the adult National Living Wage into a single unified rate for all workers. No timeline for this has been confirmed but this move could further increase baseline labour costs for businesses that currently rely on the lower band.

For those who are non-compliant with the new rules, they could be looking at criminal liability under current legislation, with penalties applied even where workers are not paid by the hour.

Businesses that believe their pay structures may not meet the new thresholds can report concerns or seek guidance through HMRC or the workplace advisory service Acas.

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