As of April 2026, small businesses can now benefit from a further increase in small employer’s relief.
HMRC will reimburse eligible employers 109% of statutory payments made to employees. The relief is designed to support smaller employers with the cost of payments such as:
- statutory maternity pay;
- paternity pay;
- adoption pay;
- shared parental pay;
- parental bereavement pay; and
- neonatal care pay.
The only exception is statutory sick pay which cannot be reclaimed.
To qualify, employers must have paid £45,000 or less in Class 1 national insurance contributions during the previous tax year, before deductions such as the employment allowance are applied. Eligible employers can reclaim the full amount of statutory payments plus an additional 9% compensation payment. This is an increase from the 108.5% reclaim rate available in 2025-26.
Larger employers that do not qualify for small employers’ relief are generally able to reclaim 92% of most statutory payments made to employees.
Claims are made through payroll software using an employer payment summary (EPS) submission to HMRC. The reclaimed amount is then deducted from PAYE and national insurance payments due to HMRC, helping employers manage the financial impact of statutory leave payments.
Get in touch if you think you might be eligible for the relief and are not already claiming it.
