If it feels like the odds are stacked against you right now, you’re not imagining it. In 2025, trying to build a stable life on low pay, insecure work and sky-high rent can be like trying to fill a leaking bucket. Every time you take a step forward, another bill knocks you back.

Employment barriers in the UK are hitting young adults hardest and it’s creating a cycle that’s tough to break. You’re working hard, but between the low wages, patchy hours and rising living costs, there’s nothing left to save. For many, debt feels like the only option just to keep up.

If you’re 18-20, you’re legally allowed to be paid just £10 an hour. That’s over £2 less than the National Living Wage of £12.21 for the same work. This means you’re at an immediate disadvantage just because of your age, before you even think about other wage disparities in the UK.

At RIFT, we’ve seen how quickly people can get trapped in this cycle. But we also know how to help break it. From claiming overpaid tax refunds to planning your budget, we’re here to help you take back control of your income and your future.

Why do young workers face low pay and wage gaps in 2025?

Young workers are often paid less for doing the exact same job. In 2025, if you’re under 21, you can legally be paid less than your older colleagues. The National Minimum Wage sets different rates depending on age, so a 19-year-old and a 24-year-old on the same shift could be earning totally different amounts.

For example, if you’re a CIS roofer earning £11 an hour at 20 years old, someone over 23 doing the same job might be getting £15. That’s a huge gap and it hits hard when you’re trying to save for a deposit, pay off debt or simply keep your head above water.

Wages aren’t rising fast enough to keep up with the cost of living, either. Essentials like food, energy and rent keep climbing, while pay stays stuck. It leaves young people in debt, feeling undervalued and unable to move forward financially, even when they’re working full-time.

That’s where RIFT can help. If you’re on the CIS or you’ve changed jobs, travelled for work or bought your own tools or uniform, you could be due a tax refund from HMRC. Even a few hundred pounds back could help bridge that pay gap.

How does insecure work and zero-hours contracts affect things?

It’s not just low wages making life harder. It’s also the lack of steady work. In 2025, more young adults are juggling gig jobs, zero-hours contracts and short-term roles than ever. It might offer flexibility but it also means no guaranteed income, no sick pay and no certainty about your next payslip.

That kind of instability makes it almost impossible to plan ahead. Say you’ve just left the military and are trying to settle into civilian life. If the only work available is on a zero-hours contract, your hours and pay can change weekly. You can’t budget, save or get ahead when your income’s all over the place.

And when the money doesn’t stretch, it’s tempting, and sometimes necessary, to turn to credit cards, overdrafts or even payday loans. That can start a dangerous chain reaction. Irregular income leads to missed payments, which lead to late fees and worse credit. The stress piles on fast.

Zero-hours contracts and debt often go hand in hand. But if you’re trying to keep track of an unpredictable income, our budget planner can help you get some control back.

Why do high housing costs leave young workers with nothing to save?

Even if you’re working flat out, high rent can wipe out your earnings before the month’s even started. In 2025, young renters are spending around 34% of their income on rent alone. This is above the affordable benchmark of 30%.

Take a £30,000 salary. That sounds like a decent income, until you’re paying £900 a month in rent. Add bills, travel, food and everything else, and there’s barely anything left. In cities like London, that number jumps even higher, while wages don’t keep pace. The North East might be more affordable, but job opportunities are harder to come by.

It all adds up to a frustrating reality. You’re working hard but getting nowhere fast. No room to save. No buffer for emergencies. And no real chance of breaking out without help.

That’s where planning ahead matters. Our budgeting planner helps you map your income against rent and other costs, so you can see where your money’s going and where you might claw some of it back.

How does the benefits system keep people in the poverty trap?

For many young workers, the benefits system is meant to provide a safety net. However, in practice it can feel like a trap. Universal Credit is designed to support low-income earners but it reduces as you earn more. It’s called tapering and it means for every extra pound you earn, you could lose 55p (or more) in benefits.

That can leave you worse off for working more hours, taking a second job or accepting a small pay rise. On top of that, earning more might cut your housing benefit or leave you struggling with the long delays and admin that come with changing claims.

Instead of helping people move forward, the system can discourage you from progressing because there’s no financial reward for doing so. It can be frustrating, demotivating and unfair.

While policy reform is slow to come, RIFT can help you take control where you can. If you’ve overpaid tax, we’ll help you claim it back. That refund could reduce your reliance on benefits and give you some breathing room.

What triggers debt cycles for young adults?

Debt cycles often don’t start with bad decisions. They can start with impossible choices. Here’s how it happens:

  • Low pay means your income doesn’t cover the basics.

  • High rent eats up what little you have.

  • Insecure work in the UK means your pay changes from week to week.

  • Benefits tapering removes the safety net just when you need it most.

  • Unexpected costs like a broken boiler or missed shift can tip everything over the edge.

It only takes one setback to fall behind. Then the spiral starts:

Late rent → credit card → payday loan → missed payment → overdraft fees → more borrowing

The stress builds. Sleep gets worse. Work becomes harder. And the cycle deepens.

This is where early action makes a difference. A tax refund, which averages over £3,000 for RIFT customers, could clear overdrafts, close credit cards and give you the reset you need.

What policy changes could fix employment barriers and debt cycles?

We need to figure out how to break the debt cycle. There’s no quick fix but change is possible. Right now, there’s growing pressure to level the playing field for young workers and tackle the structural issues fuelling debt cycles. Some of the key areas being debated are:

  • National Minimum Wage reform – Campaigns are calling for under-21s to earn the same minimum wage as older workers.

  • Zero-hours contract regulation – More people want tighter rules or even bans on exploitative contract types that leave workers with no income stability.

  • Universal Credit reform – The taper rate and waiting periods are under review, with calls to make the system fairer and more flexible.

  • Affordable housing – Government targets for building affordable homes are falling short and renters are feeling the pinch.

  • Cost of living pressures – Inflation and rising interest rates continue to squeeze low earners hardest.

While we wait for policy to catch up, RIFT is here to help with real-world solutions, including tax refunds, financial tools and friendly tax advice to help you stay afloat.

How can you break the debt cycle and take back control?

You can’t change the system overnight but you can take back some control. At RIFT, we can help you boost your income, cut stress and make your money work harder. Here’s where to start:

  • Claim your tax refund – If you’ve paid for work travel, uniforms, tools or switched jobs, you could be owed money. The average refund is over £3,000, possibly enough to clear debt or build a safety net.

  • Use our budget planner – It helps track where your money’s going and highlights areas to cut back or save.

  • Check your tax code – Multiple or short-term jobs often mean overpaid tax. We’ll help you check and claim it back.

  • Get advice early – If you’re struggling, don’t wait. A short chat with RIFT could help you avoid debt spirals and get back on track.

You don’t have to do this alone. We’ve helped thousands of young workers like you get money back from HMRC. Let’s do the same for you.

How RIFT can help

Low pay, insecure work and rising housing costs are making it harder than ever for young adults to stay afloat. Add in the challenges of the benefits system and it’s no wonder so many are stuck in debt cycles.

But you’re not powerless. By claiming what you’re owed and planning ahead, you can take real steps toward stability.

If you’re struggling to make ends meet, don’t leave money with HMRC. Use our tax refund calculator to see if you’re owed a refund, or get in touch today.

Frequently asked questions

What are the biggest employment barriers young people face in 2025?

Low pay, age-based wage gaps, insecure work and unaffordable housing are the biggest barriers. These issues make it hard to save, budget or build financial stability.

How do insecure contracts lead to debt cycles?

Short-term and zero-hours contracts mean unpredictable income. When you can’t plan ahead, it’s easier to fall behind on bills, leading to borrowing, missed payments and mounting debt.

Why do low wages trap people in poverty?

Low hourly pay, especially for under-21s, often isn’t enough to cover essentials. With no buffer or savings, one setback can push you into debt that’s hard to escape.

What role does Universal Credit play in poverty traps?

The Universal Credit poverty trap happens because the benefit reduces as you earn more (called tapering), which can leave you worse off for working extra hours. It creates a system where progress can feel punished, not rewarded.

What policy changes could help young people escape debt cycles?

Raising the minimum wage for under-21s, regulating zero-hours contracts, reforming Universal Credit and improving housing affordability would all make a real difference.

Can tax refunds really make a difference if I’m struggling with debt?

Many young workers are due refunds worth thousands. That money can clear debt, ease stress and help you get back on track. It’s one of the quickest ways to take back control.