What is Small Employers’ Relief (SER)?
Small Employers’ Relief allows businesses paying £45,000 or less in Class 1 National Insurance contributions per year to reclaim 100% of statutory maternity, paternity, adoption, parental bereavement, neonatal or shared parental pay, plus a compensation percentage to cover employer costs. For larger employers, only 92% compensation is available. (gov.uk)
What’s changing from 6 April 2026?
- Compensation rate increases from 8.5% to 9%, meaning qualifying employers can now reclaim 109% of all statutory payments instead of 108.5%. (gov.uk)
- Statutory payments covered include: Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Shared Parental Pay, Parental Bereavement Pay, and Neonatal Care Pay. Statutory Sick Pay (SSP) is excluded. (gov.uk)
Who qualifies and who doesn’t?
- Must have £45,000 or less in annual Class 1 NICs payable. (gov.uk)
- If you exceed that threshold, you settle for only 92% compensation. Employers must ensure their NICs liability stays under or equal to £45,000 (Class 1) to benefit. No relief on SSP. (gov.uk)
Practical example
Business A is a retail shop where Class 1 NICs are £42,000/year. In one month they pay £1,000 in statutory maternity pay:
- With new relief, they can reclaim £1,090 from HMRC instead of £1,085. A small saving, but annualised, this can help cash flow materially for businesses with several statutory payments per year.
Business B—NICs £50,000/year—does not qualify for the 109% rate, and can only reclaim the statutory payment cost, plus 92% of the employer's compensation percentage. So the marginal increase only helps those under the threshold.
What you should do now
- Check your Class 1 NICs history for the past year to ensure you qualify for SER.
- Audit payroll schedules to monitor statutory payments coming up.
- Communicate with payroll providers or internal payroll team to update systems to reflect the new 9% rate from 6 April 2026.
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This small update can add up: for SMEs with frequent statutory leave-taking, the extra 0.5% relief can translate into thousands saved annually. Stay alert.