HMRC has confirmed that the small employers’ relief (SER) compensation rate will increase from 6 April 2026.
From the 2026/27 tax year, eligible employers will be able to reclaim an additional 9% on top of 100% of certain statutory payments. This is a one percentage point increase on the current 8.5% rate.
At present, most employers can recover 92% of statutory maternity pay, statutory paternity pay, statutory adoption pay, shared parental pay, statutory parental bereavement pay and statutory neonatal care pay.
However, businesses that qualify for SER, broadly those that paid less than £45,000 in Class 1 National Insurance contributions in the previous tax year, can reclaim 100% of these payments, plus a compensation uplift. From April 2026, that uplift will rise to 9%.
In practical terms, this means small employers will recover 109% of qualifying statutory payments, helping to offset administrative costs and the impact of employee absences.
The change comes at a time of rising employment costs. National minimum wage rates are set to increase by up to 7%, depending on the worker’s age. In addition, the Employment Rights Act 2025 will introduce a series of new ‘day one’ employment rights, covering areas such as statutory sick pay, parental leave, unfair dismissal protections and zero-hours contracts.
Together, these changes will affect employers of all sizes. For smaller businesses in particular, the increase in SER offers some welcome financial support as broader employment reforms take effect.
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