HM Revenue and Customs (HMRC) has confirmed that the Small Employers’ Relief (SER) rate of compensation has been increased to 9% for the 2026–27 tax year.
Employers can currently reclaim 92% of employees’ statutory maternity, paternity, adoption, parental bereavement, neonatal care and shared parental pay.
HMRC explains that if a business has paid £45,000 or less in Class 1 National Insurance (ignoring any reductions such as Employment Allowance) in the last complete tax year, it can qualify for SER and reclaim 100% of the statutory payment, plus an additional 8.5% compensation. This rate was introduced from 6 April 2025, having formerly being 3.5%.
From 6 April 2026, the rate of compensation will increase from 8.5% to 9% so that employers who qualify for SER will be able to reclaim 109% from HMRC. The SER threshold will remain at £45,000.
It’s important to note that the recovery on statutory payments does not extend to statutory sick pay (SSP). This means that the full cost of SSP must be borne by the employer. The Employment Rights Act 2025 is set to reform the SSP system from April 2026 by requiring payment of SSP from the first full day of sickness absence and removing the operation of the lower earnings limit. SSP will instead be paid at the lower of 80% of average pay or the standard rate, set to be £123.25 per week.
