Small Employers Relief increased to 8.5%

NICs compensation rate on Statutory Payments for 2025-26

Last month, HM Revenue and Customs (HMRC) informed payroll software developers of an increase in National Insurance Contributions Compensation (NICs Comp) for child-related statutory payments, following a consultation by HM Treasury. However, details regarding the consultation process and timing considerations for payroll software developers remain unclear, with new tax year updates already underway.

Currently, employers can reclaim 92% of various statutory payments, while small employers—those with Class 1 National Insurance contributions of £45,000 or less in the previous tax year—qualify for Small Employers’ Relief (SER). These businesses can reclaim 100% of statutory payments plus an additional 3% compensation.

From 6th April 2025, the compensation rate will rise from 3% to 8.5%, enabling qualifying employers to reclaim 108.5% of statutory payments through the Employer Payment Summary (EPS) system.

• The updated rate will apply to:

• Statutory Maternity Pay (SMP)

• Statutory Paternity Pay (SPP)

• Statutory Adoption Pay (SAP)

• Shared Parental Pay (ShPP)

• Statutory Parental Bereavement Pay (SPBP)

• The newly introduced Statutory Neonatal Care Pay (SNCP), available from 14th April 2025

The SER threshold remains at £45,000. However, with a 15% increase in employer National Insurance Contributions, some businesses may no longer qualify from April 2026.

Source: CIPP