Pay Rises in 2027: What UK Workers Can Realistically Expect

Pay review season has a rhythm. Employers set budgets in the autumn, surveys of their intentions land in September and October, and the number they settle on tells you most of what you need to know about the year ahead. For 2027 that number is 3 per cent, and it is the same 3 per cent it was for 2026 and 2025. What has changed is everything around it: inflation is heading back above 4 per cent, the minimum wage is rising faster than average pay, the public sector has already locked in its awards, and a job move pays less of a premium than it did two years ago. This guide sets out what UK workers can realistically expect from pay rises in 2027, who gets more, who gets less, and what 3 per cent is actually worth once the payslip is printed.

The headline: 3 per cent, again

Five sources, one answer. Brightmine’s Sheila Attwood summarised it when the forecast was published: pay awards remain stagnant and that looks to be the story of 2027. The outturn data agrees with the forecasts. Brightmine’s median award in the three months to August 2026 was 3 per cent and Incomes Data Research’s was 3.3 per cent in the three months to July, both down from a year earlier.

Economy wide earnings data tells the same story with more noise. The Office for National Statistics put regular pay growth at 3.5 per cent in the three months to July 2026, worth 0.8 per cent after inflation. The KPMG and REC Report on Jobs for September 2026 found starting salary inflation for new permanent hires easing for the first time in four months and still below its historical average, which matters because the premium for moving jobs is what has kept average earnings growth above settlement levels.

Why employers are stuck at 3 per cent

Three reasons, all of them structural rather than temporary. Employer National Insurance rose to 15 per cent in April 2025 with the threshold cut to 5,000 pounds a year, and both remain in force for 2026/27, so every pound of pay rise costs the employer 1.15 pounds before pension. Growth is weak: the Office for Budget Responsibility’s March 2026 forecast had GDP growing 1.1 per cent in 2026 and 1.6 per cent in 2027, and its projection for average earnings growth was about 3.5 per cent in 2026 falling to an average of around 2.25 per cent a year thereafter. And the labour market has loosened: unemployment at 4.9 per cent, vacancies at 702,000 and candidate availability rising, according to the ONS and the recruiters, means employers no longer need to pay to retain people who have nowhere to go.

The CIPD’s summer 2026 survey captures the mood: 62 per cent of employers planned to recruit, 21 per cent planned redundancies, and the median pay award intention sat at 3 per cent across all three sectors. That is a market that is neither generous nor panicking. The wider picture is in our UK job market 2027 outlook.

Will 3 per cent beat inflation?

Not at the start of the year, on the Bank of England’s current numbers. Consumer price inflation was 3.1 per cent in August 2026, and the Bank’s September minutes expect it to be around 3.75 per cent in the final quarter of 2026 and slightly above 4 per cent in the first quarter of 2027 before falling back. The Monetary Policy Committee held Bank Rate at 3.75 per cent in September by six votes to three, with the three dissenters wanting a rise, which tells you how seriously it takes that inflation path. A 3 per cent pay award paid in January or April 2027 against inflation above 4 per cent is a real terms cut of about a point.

The Office for Budget Responsibility was more optimistic in March 2026, forecasting inflation at 2.3 per cent in 2026 and 2 per cent from 2027. Since then energy and food prices have run hotter than it assumed. A new OBR forecast arrives with the Autumn Budget on 28 October 2026, and it is the number to watch, because if it moves towards the Bank’s view then 2027 becomes a year of flat or falling real pay for anyone on a standard award. If inflation does fall through 2027 as both forecasters expect, the second half of the year turns positive again. The timing of your pay review therefore matters more than usual: an April review bites at the worst moment, an October one at a better one.

Public sector pay in 2027

Most public sector workers already know their 2026/27 number and some know 2027/28 as well. NHS Agenda for Change staff received 3.3 per cent from 1 April 2026, above the 2.5 per cent the Department of Health and Social Care had budgeted, after the pay review body’s recommendation was accepted in February 2026. Teachers in England received 3.5 per cent from September 2026 and have 3 per cent agreed for September 2027 in a two year award, with 700 million pounds of additional school funding rising to 1.1 billion in 2027/28. Police officers received 3.5 per cent from September 2026, below the 3.9 per cent their review body recommended. Civil service departments were capped at a 3.5 per cent increase in their pay bill for 2026/27.

For 2027/28 the government issued the NHS pay review body’s remit letter in July 2026, earlier than the previous year, with the stated intention of getting awards decided before April rather than months after it. The constraint is explicit: the 2025 Spending Review set departmental budgets with no reserve access for public sector pay, so any award above what departments have planned for must be found from within existing budgets. Read that alongside the private sector forecasts and the realistic expectation for 2027/28 is a public sector award in the 3 to 3.5 per cent range, with the usual argument about funding. Current band values are in our NHS pay bands guide.

The minimum wage from April 2027

The National Living Wage for workers aged 21 and over rose to 12.71 pounds an hour in April 2026, a 4.1 per cent increase, with the 18 to 20 rate up 8.5 per cent to 10.85 pounds and the 16 to 17 and apprentice rate up 6 per cent to 8 pounds. For April 2027 the Low Pay Commission’s consultation letter of April 2026 gave a central estimate of 13.18 pounds, a 3.7 per cent rise, within a range of 13.02 to 13.34 pounds, and the government’s remit asked for a final recommendation by October 2026. The announcement is expected at or around the Budget on 28 October.

Two consequences follow. The lowest paid are the one group whose 2027 rise is likely to exceed the private sector median. And the squeeze on differentials continues: an employer paying a team leader 14 pounds an hour and a new starter 12.71 has a gap of 10 per cent that will shrink to around 6 per cent if the team leader gets 3 per cent and the starter gets 3.7. Expect more disputes about that gap in 2027 than about the headline rate. Our Real Living Wage guide covers the voluntary rate that sits above the statutory one.

What a 3 per cent rise is worth after tax

Income tax thresholds remain frozen, so every pound of a pay rise is taxed at your marginal rate with no relief from the allowance moving. Using the 2026/27 figures, a personal allowance of 12,570 pounds, basic rate of 20 per cent to 50,270, higher rate of 40 per cent to 125,140, and National Insurance at 8 per cent to 50,270 then 2 per cent, a 3 per cent rise is worth the following before pension contributions:

Note the fourth row. Someone on 55,000 pounds receives a larger gross rise than someone on 45,000 and a smaller net one, because the extra income sits in the higher rate band. A 5 per cent auto enrolment pension contribution reduces each figure by roughly a further twentieth of the gross rise. Anyone crossing the 50,270 pound threshold in 2027 should look at salary sacrifice into a pension, which converts a 58 pence in the pound rise into a full pound of retirement saving. Our guide to reading a UK payslip explains where each deduction appears.

Where pay is rising faster than 3 per cent

Averages hide the people doing well, and in 2027 there are identifiable groups of them.

• People with applied AI skills. PwC’s AI Jobs Barometer 2026, published in June, measured a 34.2 per cent wage premium for UK roles requiring specialist AI skills, up from 11 per cent a year earlier, while specialist AI postings rose 61 per cent.
• Newly qualified professionals. The Macdonald and Company Salary, Rewards and Sentiments Report 2026, produced with RICS, found obtaining a professional qualification associated with a 20.4 per cent pay rise in the UK, and 75 per cent of UK respondents in the built environment received a rise, the highest share of any region.
• Skilled construction and energy trades. RICS’s second quarter 2026 survey found construction firms expecting skilled labour costs to rise 5.2 per cent, against a general settlement of 3 per cent, with 36 per cent reporting shortages. The Clean Energy Jobs Plan’s 31 priority occupations face the same arithmetic.
• Minimum wage workers, at 3.7 per cent on the Low Pay Commission’s central estimate, and 18 to 20 year olds if the government continues closing the youth rate gap.
• Teachers, with 3.5 per cent and 3 per cent locked in for two consecutive Septembers while the private sector median sits at 3.

The common thread is scarcity. A specific credential, a specific skill or a specific statutory floor moves pay in 2027. General experience and loyalty do not. Our guide to skills in demand in 2027 sets out which capabilities carry a premium and how to acquire them.

How to get more than 3 per cent

Benchmark before the review, not after it. The surveys above are public, and an employer offering 2.5 per cent in a market where 71 per cent of awards sit between 3 and 4 is below market. Know the number and say it.

Ask for the review date to move if yours falls in April. With inflation expected to peak in the first quarter of 2027, an award set then will be set against the worst number of the year. An October review, or a mid year adjustment, is a legitimate ask.

Separate the pay rise from the promotion. The 3 per cent figure is the general award. A regrade, a step up a band or a new title with a new range is a different budget line, and it is where the real increases happen. Employers budgeting 3 per cent for across the board awards routinely budget more for promotions.

Consider moving, with eyes open. The premium for changing jobs has narrowed, with the recruiters reporting starting salary inflation below its historical average in September 2026, but it still exists in the shortage sectors. Our guide to negotiating salary in the UK covers the conversation, and live roles are on our job board.

Frequently asked questions

What is the average pay rise expected in the UK in 2027?

Three per cent. Brightmine’s 2027 forecast and the CIPD’s Labour Market Outlook both put the median expected award at 3 per cent, Incomes Data Research found 60 per cent of employers expecting 3 to 3.99 per cent, and the Bank of England’s Agents report 2027 settlements broadly in line with or slightly below 2026’s average of about 3.6 per cent.

Will pay rises beat inflation in 2027?

Probably not in the first half. The Bank of England expects inflation slightly above 4 per cent in the first quarter of 2027, so a 3 per cent award paid then is a real terms cut of about a point. If inflation falls through the year as both the Bank and the OBR expect, awards in the second half of 2027 should be positive in real terms.

What will the minimum wage be in April 2027?

The Low Pay Commission’s central estimate for the National Living Wage from April 2027 is 13.18 pounds an hour, a 3.7 per cent rise on the current 12.71 pounds, within a range of 13.02 to 13.34 pounds. The final figure is expected to be announced at or around the Autumn Budget on 28 October 2026.

What pay rise will NHS staff and teachers get in 2027?

Teachers in England already have 3 per cent agreed for September 2027 as part of a two year award. NHS Agenda for Change staff received 3.3 per cent from April 2026 and the 2027/28 pay review process started early, with the remit letter issued in July 2026, but no figure has been set. Awards must be funded from existing departmental budgets, which points to the 3 to 3.5 per cent range.

How much is a 3 per cent pay rise worth after tax?

For a basic rate taxpayer, 72 pence in the pound after 20 per cent income tax and 8 per cent National Insurance, so a 3 per cent rise on 35,000 pounds is worth about 63 pounds a month. For a higher rate taxpayer it is 58 pence in the pound, so 3 per cent on 55,000 pounds is worth about 80 pounds a month, before pension contributions.

Sources

• Brightmine, Pay trends and 2027 pay forecast, September 2026; Incomes Data Research, pay settlement survey, September 2026, and Pay Climate 2026.
• CIPD, Labour Market Outlook summer 2026, August 2026.
• Bank of England, Monetary Policy Summary and minutes, September 2026; Agents’ summary of business conditions, September 2026; Monetary Policy Report, July 2026.
• Office for Budget Responsibility, Economic and fiscal outlook, March 2026.
• Office for National Statistics, Labour market overview, UK: September 2026.
• KPMG and REC, UK Report on Jobs, October 2026.
• HMRC, Rates and thresholds for employers 2026 to 2027.
• Department for Business and Trade, National Living Wage rates April 2026; Low Pay Commission, consultation letter, April 2026, and remit 2026.
• NHS Employers, pay award announcement, February 2026; Department for Education written statement on teacher pay, July 2026; Home Office written statement on police pay, July 2026; Cabinet Office, Civil Service Pay Remit Guidance 2026 to 2027; Department of Health and Social Care, NHS Pay Review Body remit letter 2027 to 2028, July 2026; House of Commons Library, public sector pay briefing, April 2026.
• PwC UK, AI Jobs Barometer 2026, June 2026; Macdonald and Company with RICS, Salary, Rewards and Sentiments Report 2026; RICS, UK Construction Monitor Q2 2026.