Minimum Wage Underpayment Calculator, 2026/27

How this is calculated

This calculator multiplies the hourly shortfall by hours worked per week and the number of weeks affected to give arrears per employee, then multiplies by the number of employees affected at the same rate to give total exposure across the business.

Crucially, HMRC requires arrears to be recalculated and paid at the National Minimum Wage rate current at the time of repayment, not the lower historic rate that applied when the underpayment occurred, which can make the true arrears bill larger than a simple historic recalculation would suggest.

The penalty range shown reflects the statutory penalty regime: normally 200% of the arrears, though this halves to 100% if paid within 14 days of the notice of underpayment, subject to a minimum penalty of £100 and a cap of £20,000 per worker.

How underpayments are typically discovered

Underpayments often surface through an employee complaint to the Acas helpline (which can trigger an HMRC referral), a routine HMRC compliance check, or an internal payroll audit after a rate change was missed, such as an apprentice moving onto the full rate or an 18-year-old turning 21.

Because HMRC can look back years rather than months when arrears have built up, even a small ongoing shortfall can accumulate into a significant liability once multiplied across the affected period and workforce.

Correcting an underpayment proactively

Where a business identifies its own underpayment before HMRC does, paying the arrears promptly and keeping a clear record of the correction, including the recalculation method used, puts the company in a materially better position than waiting to be investigated.

Reviewing payroll systems for the specific triggers that commonly cause errors, birthdays, apprenticeship anniversaries, salary sacrifice deductions and unpaid working time, reduces the chance of the same underpayment recurring.

At what rate is minimum wage back pay calculated?

At the National Minimum Wage rate current when the arrears are paid, not the lower rate that applied at the time of the original underpayment, which can increase the total arrears due.

How big can an HMRC minimum wage penalty be?

Up to 200% of the arrears owed, reduced to 100% if paid within 14 days of the notice, subject to a minimum of £100 and a cap of £20,000 per underpaid worker.

Can HMRC name a company for minimum wage underpayment?

Yes, HMRC operates a naming scheme for confirmed minimum wage breaches above certain thresholds, which can carry reputational as well as financial consequences.

Does correcting the error voluntarily reduce the penalty?

It does not remove the statutory penalty automatically, but prompt voluntary correction and cooperation with HMRC is generally viewed favourably and can help resolve matters faster and avoid escalation.