The 2026 Minimum Wage Rise: What Charities Need to Consider Now

What the 2026 Minimum Wage Rise Means for Charities

The government has confirmed that minimum wage rates will increase from April 2026, a change that will benefit thousands of low-paid workers across the UK. But for charities already balancing rising costs, increased demand and constrained funding, the financial impact is likely to be significant.

From April 2026:

• The National Living Wage (21+) will rise by 4.1% to £12.71 per hour

• The National Minimum Wage (18–20) will rise by 8.5% to £10.85 per hour

• Apprentice rates will increase by 6% to £8 per hour

These uplifts are part of the government’s wider plan to support people struggling with the cost of living. While the intention is positive, many charities are concerned about how to deal with these increases at a time when budgets are already stretched.

Why It’s a Challenge for the Sector

Charities tend to employ large numbers of frontline staff, from support workers to community engagement teams, who are often paid at or near minimum wage. Even a modest rise can translate into a substantial jump in operating costs.

For many organisations, this comes on top of:

• rising operational and energy costs

• increased employer national insurance contributions

• higher demand for services

• stagnant grant funding

• public sector contracts that don’t rise in line with inflation or wage increases

Some charities have already been forced to make difficult decisions in response to ongoing cost pressures, including reducing services, pausing recruitment, or restructuring teams. The upcoming wage rise may intensify this reality unless additional funding is made available.

The Risk to Services

If charities cannot secure uplifts to their contracts or additional grant funding, the pressure may fall on their frontline delivery. Organisations supporting people in crisis, including disability charities, youth organisations, hospices, community groups, and social care providers could face the toughest choices.

For those delivering publicly funded services, there remains a clear need for commissioners to ensure contracts reflect the true cost of delivery, including wage obligations. Without this, the risk is that essential services shrink just as demand grows.

It’s Not All Negative

While challenges are very real, there are also areas where the broader policy environment may ease pressure on certain services.

Recent decisions such as lifting the two-child benefit cap, extending free school meals to families on Universal Credit, and widening access to Winter Fuel Payments could reduce demand on some frontline charities. For organisations supporting families, this may offer some breathing room.

In addition, changes to capital gains tax and inheritance tax could encourage some donors to increase charitable giving.

What Charities Can Do Now

While funding uncertainty remains, organisations can take proactive steps:

1. Review workforce planning early
Understand where increases will hit hardest and model scenarios.

2. Revisit contract and grant agreements
Open conversations with commissioners and funders about inflationary uplifts.

3. Strengthen financial forecasting
Plan for wage increases, insurance changes, and cost-of-living impacts across the next 12–18 months.

4. Prioritise fundraising pipelines
Diversify income where possible to avoid over-reliance on any one funding stream.

5. Communicate clearly with trustees
Boards should understand financial risks and future staffing pressures.

Final Thoughts

The 2026 wage increases are rooted in a positive aim: ensuring workers can keep up with rising living costs. But without accompanying support for the charity sector, organisations could face even greater financial strain.

At Merrifield, we see first-hand how vital charities are to communities and how essential it is that they have the resources to retain skilled staff, deliver services safely, and plan for the future. Supporting fair pay and sustainable funding must go hand-in-hand.

If your organisation is reviewing staffing, workforce planning, or recruitment priorities ahead of 2026, our specialist team is here to help.