Small Employers’ Relief in the UK: Eligibility & How to Claim

Small Employers' Relief (SER) lets eligible employers reclaim 100% of certain statutory payments they make to employees, plus an additional compensation payment from HMRC. 

If you run a small business and you're paying maternity, paternity, or other statutory payments to employees, you don't have to foot the entire bill yourself. 

The scheme exists because statutory payments are a legal obligation, not a business choice, and the government recognises that the cost can hit smaller employers harder. If your total National Insurance contributions fall below a certain threshold, you're likely eligible, and the process for claiming is simpler than you might expect.

This guide explains who qualifies, how much you can reclaim, and how to claim SER through PAYE.

Key points

• Eligible employers can reclaim more than they pay out 💷
  If your business qualifies for SER, you can usually reclaim 109% of qualifying statutory payments from HMRC. That includes the full payment made to your employee, plus an additional 9% compensation.
• The £45,000 National Insurance threshold determines eligibility 📊
  Qualification is based on your total Class 1 NICs in the previous tax year, not your turnover, profit, or number of employees. 
• Several types of family-related statutory pay are covered ✅
  You can typically reclaim Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Shared Parental Pay, Statutory Parental Bereavement Pay, and Statutory Neonatal Care Pay. Statutory Sick Pay isn’t covered.
• Claims are made through payroll reporting 🧾
  You don't usually need to complete a separate claim form. Instead, you'll report the payments through your payroll software and Employer Payment Summary, and HMRC will offset the amount against your PAYE liabilities.
• Accurate payroll records help you reclaim everything you're owed 🚀
  Many employers miss out by using outdated payroll settings, checking the wrong tax year, or failing to keep proper records. ANNA helps simplify payroll, statutory payments, and HMRC reporting. It brings everything under one roof, so it’s easier to stay compliant and claim the full amount you're entitled to.

What is Small Employers' Relief?

SER is an HMRC scheme that helps smaller businesses recover the cost of statutory payments made to employees taking family-related leave.

Employers that don't qualify for SER can usually reclaim 92% of what they've paid.

However, employers that meet the small employer criteria can reclaim 109%.

The extra 9% is designed to compensate smaller businesses for the administrative costs and employer National Insurance costs associated with making these payments. In practice, it means HMRC pays back more than the amount you've paid to your employee.

For many small businesses, especially those with only a handful of employees, this can significantly reduce the financial impact of maternity leave or other periods of statutory family leave.

Who qualifies for Small Employers' Relief?

For the 2026/27 tax year, you'll usually qualify if your total Class 1 NIC bill was £45,000 or less in the last complete tax year before the employee's qualifying week.

HMRC doesn’t look at your turnover, profit, or number of employees. It looks at the amount of Class 1 NICs reported through payroll. 

For example, a consultancy generating £400,000 a year could still qualify if it has a relatively small payroll. Meanwhile, a labour-intensive business with lower revenue but more employees may exceed the threshold and not qualify.

Which statutory payments can you reclaim?

SER applies to several family-related statutory payments.

These include:

• Statutory Maternity Pay (SMP)
• Statutory Paternity Pay (SPP)
• Statutory Adoption Pay (SAP)
• Shared Parental Pay (ShPP)
• Statutory Parental Bereavement Pay (SPBP)
• Statutory Neonatal Care Pay (SNCP)

In each case, you pay the employee through your payroll as normal and then recover the relevant amount from HMRC.

Statutory Maternity Pay

SMP is paid to eligible employees who take maternity leave following the birth of a child. 

Because maternity leave can last for an extended period, SMP is often the statutory payment that generates the largest SER claims.

Statutory Paternity Pay

SPP applies when eligible employees take time off following the birth or adoption of a child.

Although claims are typically smaller than maternity pay claims, the same recovery rules apply.

Shared Parental Pay

SPP allows parents to share leave and statutory pay by splitting up to 50 weeks of leave and up to 37 weeks of pay. 

Eligibility and notice requirements for SPP are more detailed than for standard maternity or paternity pay. Check out GOV.UK’s guide or speak with an accountant if you’re unsure how the rules apply to your circumstances. 

Statutory Parental Bereavement Pay

SPBP is available to eligible employees who take time off following the loss of a child or a stillbirth after 24 weeks of pregnancy.

Although these claims are less common than maternity or paternity pay claims, employers can usually reclaim them through SER in the same way if they meet the eligibility requirements.

Statutory Neonatal Care Pay

SNCP is paid to eligible employees whose baby requires neonatal medical care shortly after birth.

Introduced to provide additional support for families facing extended hospital stays, SNCP follows the same recovery rules as other qualifying statutory payments. 

What about Statutory Sick Pay?

SSP isn’t covered by SER.

Whilst SSP is a statutory payment, HMRC generally doesn’t allow employers to reclaim it through SER.

How to claim Small Employers' Relief

You don't usually need to submit a separate claim form.

Instead, you can recover the money through your payroll reporting process.

Here’s how:

• Pay the employee through payroll: Process the statutory payment in the same way as the employee's regular wages
• Record the payment in your payroll software: Enter the statutory payment correctly so your software can calculate how much you're entitled to reclaim
• Submit an Employer Payment Summary (EPS): Report the amount you're reclaiming to HMRC so it can be offset against your PAYE and National Insurance liabilities
• Recover the money from HMRC: Reduce your PAYE payment accordingly, or request funding or a repayment if your reclaim exceeds the amount you owe

Common mistakes employers make

The following errors often come up when it comes to SER:

• Using outdated payroll software settings: Payroll software can usually calculate statutory pay recoveries automatically, but only if it's configured correctly. Outdated rates or incorrect settings may result in underclaiming or inaccurate figures.
• Checking the wrong tax year: Eligibility is based on your total Class 1 NIC bill in the previous complete tax year. Even if your payroll has changed significantly since then, it's the earlier year's figures that count.
• Not reclaiming the full amount: Some employers know they can recover statutory payments but don't realise they qualify for the higher SER rate. They reclaim at 92% when they're entitled to 109%.
• Failing to keep adequate records: You'll need accurate records of the statutory payments made, amounts reclaimed, and any supporting employee documentation. Poor record-keeping can make it difficult to justify a claim to HMRC.

🧠 Good to know

If you're unsure whether you qualify or how much you can reclaim, it's a good idea to check your previous year's National Insurance records before submitting your payroll reports. A simple mistake can mean recovering less than you're entitled to.

Stay on top of payroll and reclaim what you're owed with ANNA

If you run a small business, keeping payroll accurate, maintaining proper records, and staying on top of HMRC reporting can eat up more time than it should. That's where ANNA comes in.

ANNA isn't traditional accounting software. It's an all-in-one business app that handles the financial admin in the background, so you can focus on running your business.

Instead of juggling separate tools and spreadsheets, you can manage everything in one place with ANNA: 

• Automatic expense capture and categorisation: Transactions are sorted automatically, and eligible expenses are identified and claimed without manual logging
• Real-time tax estimates: Your tax bill is calculated as you go, so there are no surprises when payment deadlines arrive
• Smart Money Pots: A percentage of your income is set aside for tax automatically, helping you avoid a last-minute scramble
• Smart invoicing: Every invoice is created, sent, and chased automatically, with payments matched as they come in
• Built-in UK business account: All your transactions are managed in one place, with cards and transfers fully integrated with your bookkeeping
• Automated VAT returns: Returns are automatically calculated and filed in line with Making Tax Digital requirements
• Payroll management: Each pay run is processed accurately, with statutory payments recorded and EPS submitted to HMRC
• Smart reminders: Deadlines are flagged in advance, so you never miss a filing or payment date
• 24/7 tax support: Every question gets a fast answer, even during filing deadlines and peak periods

Open an ANNA account and make payroll admin one less thing to worry about.