How does the minimum wage affect rural business?

At a time of heightened anxiety over the state of the UK economy, many CLA members have been getting in touch about the impact of the national minimum and living wage on their businesses.

In this blog, we break down the current rate of the minimum wage, explain how they apply across different workers – including apprentices – and explain how accommodation offsetting works. We’re also keen to hear your views, so we can ensure your experiences are reflected in discussions with policymakers.

The National Minimum Wage is the minimum pay per hour most workers in the UK are entitled to by law. It is decided by the UK Government following a recommendation from the Low Pay Commission.

The rate varies depending on the age of the employee and whether they are an apprentice. Workers who are 21 years of age or older must be paid at least the National Living Wage. This is the highest rate of the National Minimum Wage.

The accommodation offset rose by 4.1% to £11.10 per day for 2026/27. The weekly rate is £77.70 (7 X £11.10). The table below shows the accommodation offset rate for previous years.

If an employer charges more than the offset rate, the difference is taken off the worker’s pay which counts for the National Minimum Wage. This means the higher the accommodation charge, the lower a worker’s pay when calculating the minimum wage.

If the accommodation charge is at or below the offset rate, it does not have an effect on the worker’s pay.

If the accommodation is free, the offset rate is added to the worker’s pay.

The effect of the accommodation offset on the National Minimum Wage or National Living Wage depends on how much an employer charges for accommodation. It’s calculated by ‘pay period’, the intervals at which someone is being paid. This can be weekly, monthly or in irregular intervals such as every 10 days.

If the accommodation is free, it still affects the minimum wage, as the accommodation offset of £11.10 per day, or £77.70 per each seven-day period is applied to the hourly rate that is paid.

Let’s look at two examples.

Firstly: Joe is 24 and gets paid £10.60 an hour which is below the National Minimum Wage of £12.71 per hour (ph). He works 30 hours a week. He gets paid every seven days (his pay period). The employer provides free accommodation seven days a week. This brings Joe’s pay up to £13.19 an hour, which is above the National Minimum Wage of £12.71.

The calculation is as follows:

• £10.60ph X 30 (number of hours worked) = £318.00
• Accommodation offset rate at £77.70 (per 7 days) added to week worked
• £318.00 + £77.70 = £395.70
• £395.70 / 30 (hours worked) = £13.19ph

As a second example: Mark is 26 and gets £12.71ph which is the National Minimum Wage. He works 39 hours a week and gets paid every seven days. The employer charges £12.50 per day which is above the accommodation offset rate of £11.10 per day. This means that Mark’s pay is £12.46 which is below the National Minimum Wage.

The calculation is as follows:

• £12.71ph X 39 (number of hours worked) = £495.69
• Minus accommodation charge of £12.50 per day = £87.50
• Plus accommodation offset of £77.70 (per 7 days) = £77.70
• £495.69 - £87.50 + £77.70 = £485.89
• £485.69 / 39 (hours worked) = £12.46ph

We have received concerns from a number of members as to the logic of how the accommodation offset is applied. So that we can assess this further and provide evidence to the Low Pay Commission through the Confederation of British Industry (CBI), we need to hear your views. Please contact charles.trotman@cla.org.uk by Tuesday 26 May.