UK Payroll Software

Small Employers Relief rises to 9% from Apr 2026

Elena Segura

Cofounder

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Givver is officially recognised by HMRC (HM Revenue & Customs) as a payroll software provider. This recognition means our software has met HMRC’s standards, passed their testing process, and is listed on the official GOV.UK site. We’re committed to upholding the quality and compliance that come with this recognition.

HMRC increases Small Employers Relief compensation to 9%

From 6 April 2026 HM Revenue & Customs (HMRC) will increase the Small Employers Relief compensation rate from 8.5% to 9%. That means qualifying employers will be able to reclaim 109% of certain Statutory Pay amounts (100% reimbursement of the statutory payment plus 9% compensation).

What exactly is changing?

Current baseline: most employers can reclaim 92% of Statutory Maternity, Paternity and related pay.
Small Employers Relief (SER): businesses that paid £45,000 or less in Class 1 National Insurance contributions in the last complete tax year (ignoring reductions such as Employment Allowance) qualify for SER and reclaim the full statutory payment plus a compensation percentage.
From 6 April 2026, the compensation element increases from 8.5% to 9%, raising the total reclaimable to 109% for qualifying employers.

Which statutory payments are affected?

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

Practical implications for payroll, HR and finance teams

Update payroll configurations: ensure payroll software and routines apply the new 9% compensation for employers who meet the SER threshold from 6 April 2026.
Confirm eligibility: determine whether your business paid £45,000 or less in Class 1 National Insurance in the last complete tax year (do not include reductions such as Employment Allowance when assessing eligibility).
Reconcile reimbursements: because the reclaimable amount can exceed 100% (statutory pay + compensation), check accounting treatment and reconciliation processes so reimbursements are posted correctly.
Communicate changes: notify payroll, HR and finance teams, and any external payroll providers, about the new rate and the effective date.

Quick example

If an employer pays an employee £1,000 in statutory pay and qualifies for Small Employers Relief, HMRC reimbursement will include the statutory amount plus 9% compensation — a total reclaim of £1,090.

Student loan thresholds: minor correction

HMRC has also issued a minor correction to the student loan guidance (document SL_PGL 2026-2027 v1.1) to fix a typographical error in the 4-weekly value for Student Loan plan type 1. Payroll teams should review and apply the corrected figures to ensure accurate deduction calculations.

Next steps checklist

Review whether your business meets the £45,000 Class 1 NI threshold for SER.
Update payroll software and test scenarios that calculate statutory pay reimbursements including the new 9% compensation.
Apply the corrected student loan 4-weekly value for plan type 1 where applicable.
Adjust budgets and cashflow forecasts to reflect higher reimbursements and any timing differences in reclaim processing.
Monitor HMRC communications and GOV.UK for the full updated Statutory Pay and Student Loan guidance for 2026–27.

Why this matters

Even a modest change in the compensation rate affects reimbursements and payroll accounting. For small employers — especially creative studios, agencies and small product teams with tight margins — the extra 0.5 percentage point (from 8.5% to 9%) increases the compensation received from HMRC and should be reflected in payroll configurations and financial planning.

Final note

HMRC has updated its statutory pay and student loan guidance for 2026–27 to reflect these changes. Ensure your systems and processes are updated ahead of the 6 April 2026 effective date to avoid errors in deduction, reimbursement and reporting.