Tax Planning
How the SME Employer Relief Boost Can Lower Payroll Costs from April 2026
Exploring how the rise in Small Employers’ Relief from 8.5% to 9% empowers small businesses to reclaim more on statutory statutory pay and save on payroll administration.
By NomadicTax Research Team • 5-8 min read • May 5, 2026
## 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](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
## 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](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
- 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](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
## Who qualifies and who doesn’t?
- Must have **£45,000 or less in annual Class 1 NICs payable**. ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
- 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](https://www.gov.uk/government/publications/employer-bulletin-april-2026/april-2026-issue-of-the-employer-bulletin?utm_source=openai))
## 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.