With the rising employment costs and business rates set to put further pressure on small businesses, it can be hard to see a way forward.
However, there seems to finally be a glimmer of hope.
HMRC 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 is giving small businesses a helping hand to manage statutory costs and improve 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, plus a small additional percentage to cover administrative costs.
From April 2026, qualifying businesses can claim 100 per cent of statutory payments alongside the new 9 per cent compensation rate.
This applies to maternity, paternity, adoption, neonatal care, shared parental and parent bereavement pay.
For larger businesses that do not qualify as small employers, relief is usually limited to 92 per cent of statutory payments.
Who qualifies for SER?
Qualifying businesses 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 – 15th 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 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?
Small businesses are facing difficult times right now and you must be aware of the reliefs that can ease some of the financial pressures.
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 and we can 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.
