The 2026/27 Increase to Small Employers’ Relief
As we approach the new tax year, staying ahead of payroll compliance is essential for any growing UK business. At Zyla Accountants, we pride ourselves on ensuring our clients don't just comply with HMRC regulations, but actively benefit from the reliefs available to them.
One significant update for the 2026/27 tax year is the confirmed increase to the Small Employers’ Relief (SER) compensation rate. From 6 April 2026, eligible small businesses will see a boost in the amount they can recover from HMRC when paying statutory parental and bereavement pay.
What is Changing on 6 April 2026?
For the current tax year, the SER compensation rate stands at 103% (100% of the statutory payment plus a 3% compensation top-up). However, HMRC has confirmed that from April 2026, the compensation element is rising to 9%.
This means that eligible employers can reclaim a total of 109% of the statutory payments they make to employees.
The Financial Impact
This 1 percentage point increase from the previous 8.5% (or 3% in earlier years) is designed to help smaller enterprises offset the indirect costs of administering leave, such as payroll processing fees, employer National Insurance contributions on the statutory pay, and the logistical costs of managing staff cover.
| Employer Category | Recovery Rate (2026/27) |
|---|---|
| Small Employers (Qualify for SER) | 109% |
| Larger Employers (Standard Rate) | 92% |
Do You Qualify for Small Employers’ Relief?
Eligibility for SER is not based on your turnover or your sector, but on your Total Class 1 National Insurance contributions.
To qualify for the 109% reclaim rate in the 2026/27 tax year, your total Class 1 NICs (both employer and employee contributions combined) must have been £45,000 or less in the relevant prior tax year.
Important Note: When calculating your total NICs for eligibility purposes, you must ignore any reductions from the Employment Allowance. Even if your actual bill was reduced to zero by the allowance, HMRC looks at the gross liability before the allowance was applied.
Which Payments Can You Reclaim?
The SER uplift applies to the suite of statutory family-related payments. If you are paying any of the following to your team, you should ensure your payroll software is configured for the 109% recovery:
Statutory Maternity Pay (SMP)
Statutory Paternity Pay (SPP)
Statutory Adoption Pay (SAP)
Statutory Shared Parental Pay (ShPP)
Statutory Parental Bereavement Pay (SPBP)
Statutory Neonatal Care Pay (SNCP)
From April 2026, the standard weekly rate for these payments is set at £194.32 (or 90% of average weekly earnings, whichever is lower).
The Broader Context: Rising Employment Costs
The increase in SER comes at a time of significant change for UK employers. It is vital to view this relief as part of a larger shifting landscape of employment costs taking effect in April 2026:
National Minimum Wage Increases: The 21+ rate rises to £12.71 per hour, while the 18–20 rate jumps to £10.85.
The Employment Rights Act 2025: Several "day one" rights come into force, including paternity leave and ordinary parental leave.
Statutory Sick Pay (SSP) Reform: SSP will now be payable from the first day of illness rather than the fourth, and the Lower Earnings Limit for eligibility has been removed, bringing more part-time staff into the SSP net.
How Zyla Accountants Can Help
With the introduction of "day one" rights and the removal of the SSP earnings floor, payroll administration is becoming increasingly complex. While the 109% SER rate offers a welcome financial cushion, the burden of accurate calculation and timely filing remains with the employer.
At Zyla, we ensure your payroll is not only processed accurately but that every penny of eligible relief is claimed back from HMRC to protect your cash flow.