Small Employers' Relief - Understanding Who is Eligible, and How to Claim

If you’re an employer paying Class 1 National Insurance on behalf of your employees, you can offset up to a particular amount per tax year off your Employer National Insurance bill. Additionally, you may also be able to reclaim an additional percentage of any statutory parental pay that you pay within the tax year. This is what’s known as Small Employers’ Relief.

Read on to find out who qualifies, how much you can claim, and how to claim.

What is Small Employers’ Relief?

Small Employers’ Relief is a government scheme that allows small businesses who meet certain criteria to claim back 100% (plus an additional 3%) of their employees’ statutory parental pay, including maternity, paternity, adoption, bereavement, and shared parental pay.

Schemes such as this are so important for small businesses, as they help to improve cash flow, and mean that you aren’t saddled with enormous statutory payments.

What are the Small Employers’ Relief eligibility criteria for businesses?

If your gross National Insurance bill (employee and employer National Insurance) for the previous tax year was less than £45,000 before the deduction of Employment Allowance, as well as ahead of an employee’s qualifying week, you're eligible to recover the specified amounts below.

Businesses should refer to our recent article on the Alabaster ruling to understand more about qualifying weeks.

How much can small businesses claim?

Those businesses meeting the above criteria can recover an additional 11% of any statutory parental leave you've paid to employees.

This means in total, you can reclaim 103%, which is broken down into 100% recovery and 3% compensation.

Without Small Employers’ Relief, you can still claim 92% of the amount paid.

An example calculation is as follows:

You pay £600 in statutory maternity pay to an employee this month.

Without Small Employers' Relief

Without Small Employers' Relief, you can claim 92% of the amount paid.

£600 x 92% = £552

With Small Employers' Relief

With Small Employers' Relief, you can claim 100% of the amount paid, and 3% compensation. 

£600 x 100% = £600

+ £600 x 3% = £18

A total recoverable amount of £600 + £18 = £618

That sounds great! How can I claim via Small Employers’ Relief?

Small businesses using a payroll software - PayFit, for example - can claim Small Employers’ Relief through this.

PayFit will automatically calculate the amount of relief you’re entitled to, as well as include this within your Employment Payment Summary (EPS). All it takes is a few clicks in the company settings section to toggle on the ‘Company qualifies for Small Employers’ Relief’ option, and you’re all set. 

Find out what other payroll matters that PayFit helps small businesses take care of swiftly and automatically, by booking in a quick demo with a member of the team below.