Small Employers’ Relief increases for the second tax year in a row

Small businesses are facing increasing pressure to manage higher employment costs and business rates and it is becoming that much harder to maintain a healthy cash flow.

However, HMRC has offered a helping hand.

They have announced that the Small Employers’ Relief (SER) compensation rate will rise to 9 per cent for the 2026-27 tax year, up from 8.5 per cent.

This is the second consecutive tax year that the rate has increased and it is set to give small businesses a lifeline in managing statutory costs and improving cash flow.

What is Small Employers’ Relief (SER)?

SER is a government scheme that allows eligible small businesses to reclaim statutory payments made to employees.

From April 2026, eligible small employers can claim 100 per cent of statutory payments plus the new 9 per cent compensation rate.

This applies to maternity, paternity, adoption, neonatal care, shared parental and parent bereavement pay.

Larger businesses that do not qualify as small employers are limited to only 92 per cent relief on statutory payments.

Who qualifies for SER?

To qualify for SER, a business must have Class 1 National Insurance contributions of £45,000 or less in the previous tax year.

The relief applies to statutory payments for employees during their qualifying weeks of:

• Maternity pay – 15^th week before the expected due date
• Adoption leave – a week notified by the adoption agency
• Overseas adoption – date on official notification
• Parental bereavement – a week prior to a child’s death or stillbirth

If your business meets these criteria, you are eligible for the increased SER rate.

What statutory payments are covered in SER?

SER helps small businesses support employees during important life events without placing the full financial burden on the business.

The covered payments include:

• Statutory Maternity Pay (SMP)
• Statutory Paternity Pay (SPP)
• Statutory Adoption Pay (SAP)
• Statutory Shared Parental Pay (ShPP)
• Statutory Parental Bereavement Pay (SPBP)
• Neonatal care pay (from April 2026)

This increase provides welcome cash flow support, especially as the Employment Rights Act comes into effect in April 2026 and brings new statutory pay reforms.

The Act will bring new day-one rights for SPP, meaning more employees are eligible.

How do you claim SER?

Most businesses claim SER through payroll software, which calculates the relief, includes it in your Employment Payment Summary (EPS) and submits it automatically to HMRC.

However, businesses can still claim it manually by writing to HMRC at the start of the tax year, but this process may take longer.

How can we support your SER claim?

Good news is finally on the cards for small businesses and this relief can help ease some of the financial pressures that the new tax year will bring.

During these difficult times, businesses must remain aware of the reliefs they can claim.

Our professional team can assess whether you are eligible for SER and advise you on implementing it in your payroll systems.

We want to make sure your business is benefiting from all the available support.

We can review your business’s finances and advise you on any other potential reliefs you can claim, such as Employment Allowance or allowable expenses.

If you need further advice or support on Small Employers’ Relief, contact us today.