Small Employers' Relief: reclaim more than 100% of statutory parental pay

What you can reclaim

All employers can recover 92% of statutory maternity, paternity, adoption, shared parental and bereavement pay. But employers who qualify for Small Employers' Relief recover 100% plus a compensation top-up — 108.5% in total from April 2025 (up from 103%). The extra compensates you for the employer NIC you paid on the statutory pay itself.

Who counts as a small employer

You qualify if your total Class 1 National Insurance liability was £45,000 or less in the qualifying tax year (the last complete tax year before the employee's qualifying week). Plenty of businesses with 10–30 staff sit under that line without realising it.

How the money comes back

The reclaim is made through payroll: the recoverable amount is reported on an Employer Payment Summary (EPS) and offset against the PAYE and NIC you'd otherwise pay HMRC that month. If the reclaim is bigger than your bill, you can apply for advance funding from HMRC rather than funding it from cash flow.

Where businesses go wrong

The usual failures: not testing for small employer status (and reclaiming 92% when 108.5% was available), not filing the EPS at all, or funding statutory pay entirely out of pocket without any reclaim. All of it is correctable — including retrospectively. It's one of the standard checks in our free payroll review, and handled automatically for managed payroll clients.

How much statutory maternity pay can a small employer reclaim?

108.5% from April 2025 — the full amount paid plus an 8.5% compensation top-up — if your Class 1 NIC bill was £45,000 or less in the qualifying tax year. Other employers reclaim 92%.

How do I claim Small Employers' Relief?

Through your payroll: the reclaim is reported on an Employer Payment Summary (EPS) and offset against what you owe HMRC. Missed reclaims can be corrected retrospectively.

Does Small Employers' Relief apply to paternity and adoption pay?

Yes — statutory paternity, adoption, shared parental and parental bereavement pay all qualify for the same enhanced recovery rate for small employers.