Minimum Wage Rises to £12.71: What It Means for Your Take-Home Pay and Mortgage

We've crunched the numbers for workers doing 30, 40, and 50 hours per week to show exactly how much extra you'll have in your pocket after tax and National Insurance.

Take-home pay at the new £12.71 rate

Here's what you'll actually take home at the new hourly rate, compared to the current £12.21 rate, working 52 weeks per year:

30 hours per week:

• Annual gross salary: £19,828
• Annual take-home pay: £17,795
• Monthly take-home: £1,483
• Net increase: +£561/year (+£47/month)

40 hours per week (full-time):

• Annual gross salary: £26,437
• Annual take-home pay: £22,555
• Monthly take-home: £1,880
• Net increase: +£749/year (+£62/month)

50 hours per week:

• Annual gross salary: £33,046
• Annual take-home pay: £27,313
• Monthly take-home: £2,276
• Net increase: +£936/year (+£78/month)

Working full-time at 40 hours per week, you'll take home £1,880 per month—that's £62 more each month than before, or £749 extra over the year. The increase isn't quite the full £1,040 gross boost because of income tax (20%) and National Insurance (8%) on earnings above £12,570.

Can minimum wage workers get a mortgage?

With house prices remaining high, we've looked at mortgage affordability for minimum wage earners. Lenders typically offer 4 to 4.5 times your annual salary.

Single person (40 hours/week):

• Annual salary: £26,437
• Potential mortgage: £105,750 – £119,000

Couple (both on minimum wage, 40 hours/week each):

• Combined annual salary: £52,874
• Potential mortgage: £211,500 – £238,000

For a single person on minimum wage, getting on the property ladder remains challenging in much of the UK. However, a couple both working full-time on minimum wage could potentially borrow enough for a first home in many areas outside London and the South East. With shared ownership options, homeownership isn't completely out of reach.

Making the most of your pay rise

Whether you pocket the extra £62/month or use it strategically, every bit helps. Consider putting it towards building an emergency fund, contributing to a Lifetime ISA for a house deposit (and get a 25% government bonus), or paying down any high-interest debt.