Your lowest-paid UK staff get a 3.9% raise in April. Will any of it reach their savings?

What it means for your people

On October 28, the UK government confirmed that the National Living Wage will rise 3.9% to £13.21 an hour from April 1, 2027. In the same Budget, the Chancellor scrapped the planned cut to the cash ISA allowance, so people under 65 can keep putting up to £20,000 a year into tax-free cash savings. Taken together, these are two pieces of good news for lower-paid workers, and most payroll teams will treat them as a simple update to rates and guidance.

The trouble is that neither measure reaches the workers who need it most. In September, the Living Wage Foundation published a survey of more than 2,000 UK workers paid below the real Living Wage. It found that 31% had no savings at all, up from 24% a year earlier, and only 10% could cover an unexpected £200 bill from their income. A £20,000 allowance means very little to someone who can’t find £200, and a raise of 50p an hour tends to disappear into bills that rose faster than it did.

So there’s a gap between the two policies. One sets the price of an hour of work, and the other protects the place where savings can sit tax-free. Neither helps someone actually move money from a payslip into savings and keep it there. That step depends on habits, timing and the small frictions of everyday life, and employers have more influence over it than most people realize, because the first time a worker sees the April raise is on a payslip their employer produces.

What to do in the next eight weeks

Here is what that influence looks like in practice, in the order it needs to happen between now and the first April payroll.

1. Tell people about the raise before it arrives. A raise that shows up unannounced is easy to absorb without noticing. If the HR team or line managers explain the new rate in February or early March, workers have a chance to decide what they’ll do with the difference before it’s already gone. Even setting aside a small part of the increase is easier to plan before the money lands than after.
2. Make saving the easy default. Workplace savings schemes, often run through a credit union or a payroll savings provider, let workers put a fixed amount aside each payday before they ever see it. The National Payroll Institute’s 2026 survey of working Canadians, published in September, found that only 23% have access to a pay-yourself-first program, but 78% take part when one is offered. The hard part is usually getting the option in front of people, not persuading them to want it.
3. Start with an emergency fund, not an ISA. For someone with no savings, the first goal is a small buffer for the next unexpected bill, not a tax-free investment account. Financial wellbeing sessions that start there tend to land better than ones that start with allowances and tax wrappers, and they give people a target they can actually reach within a few months.
4. Prepare managers for money conversations. Line managers are often the first to see financial stress, through extra shift requests, lateness or a sudden dip in focus. Nobody is asking them to become advisers. What helps is knowing what support exists and how to point someone toward it without making the conversation awkward.
5. Correct anything that quotes £12,000. If your benefits portal, onboarding pack or last year’s financial wellbeing materials told employees the cash ISA allowance was about to fall, update them before April. It’s a small job, and getting it wrong undermines trust in the rest of the guidance.

None of this is expensive, and most of it runs on timing more than budget. The weeks before a pay rise are one of the few moments in the year when people are already thinking about money and are open to changing a habit. If the HR team uses that window well, the raise is more likely to show up as a buffer in someone’s account by the summer instead of vanishing into the next month’s bills.

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