National Living Wage is set to increase from £8.91 per hour to £9.50.
Approximately 2 million workers are paid at this level in the retail, hospitality, cleaning and maintenance sectors.
The 6.6% increase in the minimum wage is a welcome boost for all those aged 23 and over - more than twice the current 3.1% rise in the cost of living.
Minimum pay rates for younger workers are also set to go up.
The National Minimum Wage for people aged 21-22 will rise from £8.36 to £9.18 an hour and the Apprentice Rate increases from £4.30 to £4.81 an hour.
Minimum wage increase will take effect on April 1st 2022.
Here is how the minimum wage will increase next year:
The U.K. government has come under increasing pressure to help low-paid employees and younger workers, who are among the worst hit by the Covid pandemic, and mostly swallowed up by tax rises, universal credit cuts and higher energy bills.
The increases to the wage rates follow recommendations made by the Low Pay Commission, an independent advisory board.
Giving millions of workers a 6.6% pay rise sounds generous and will be a welcome boost during the Covid-19 pandemic.
UK inflation is likely to surpass 5% by early 2022, leading economists to predict that interest rates could go up as early as next month.