Minimum Wage vs Real Living Wage (2025): What It Means for You
The National Living Wage is rising to £12.21, but is it enough? We compare the statutory minimum against the Real Living Wage and what the difference means for your take-home pay.
With the cost of living continuing to be a major concern for UK households, understanding the difference between the government's minimum wage and the "Real Living Wage" is more important than ever.
From 1 April 2025, the rates are changing. Here is everything you need to know.
The Rates at a Glance (From April 2025)
| Type | Rate (Per Hour) | Who Sets It? | Who Gets It? |
|---|---|---|---|
| National Living Wage | £12.21 | UK Government | Aged 21+ (Legal Minimum) |
| Real Living Wage (UK) | £12.60 | Living Wage Foundation | Voluntary (All Ages 18+) |
| Real Living Wage (London) | £13.85 | Living Wage Foundation | Voluntary (All Ages 18+) |
Statutory National Living Wage (NLW)
The government has confirmed that from 1 April 2025, the National Living Wage for those aged 21 and over will rise by 6.7% to £12.21 per hour. This is the legal minimum your employer must pay you.
Real Living Wage
The Real Living Wage is different. It is calculated by the Living Wage Foundation based on the actual cost of living.
- UK Rate: £12.60
- London Rate: £13.85
Unlike the statuory wage, this is voluntary.
The Financial Impact: Scenario breakdown
Does the difference really matter? Let's crunch the numbers for a standard 37.5-hour working week (1,950 hours a year).
Scenario 1: Outside London
- Minimum Wage (£12.21): £23,809 per year
- Real Living Wage (£12.60): £24,570 per year
- Difference: +£761 per year
That's an extra £63 per month gross pay. While the gap has narrowed, it still covers roughly a month's worth of food shopping for an average person.
Scenario 2: Inside London
- Minimum Wage (£12.21): £23,809 per year
- London Living Wage (£13.85): £27,007 per year
- Difference: +£3,198 per year
In London, the gap remains significant. A worker on the Real Living Wage earns over £3,000 more annually than someone on the statutory minimum, a crucial buffer against high capital living costs.
What Should You Do?
- Check Your Pay: Look at your payslip. Are you on the legal minimum?
- Ask Your Employer: Are they an accredited Living Wage Employer? Check the directory here.
- Know Your Rights: If you are aged 21+, you must be paid at least £12.21/hr from April 2025. Anything less is illegal.
Calculate Your Take-Home Pay
Want to see exactly how these rates affect your net income? Use our Salary Calculator to enter your hourly rate and hours per week. We'll show you the exact breakdown of Tax, NI, and what lands in your bank account.