What is small employers' relief and who is eligible for it?
As an employer, you can save money in many ways, including claiming small employers’ relief. We explore small employers’ relief, including how it works and eligibility.
Small employers' relief can be useful to businesses by helping them save money and boost cash flow.
We explore what you should know.
Summary
- With small employers’ relief, some businesses may be able to reclaim 103% of statutory parental payments.
- However, you’ll need to meet certain criteria to be eligible.
- Unbiased can quickly match you with a qualified accountant.
What is small employers’ relief?
Typically, employers can usually claim 92% of employees’ statutory maternity, paternity, adoption, parental bereavement, and shared parental pay.
However, with small employers’ relief, you can reclaim 100% plus an extra 3% of statutory parental payments. This can be useful by boosting cash flow and saving the company money.
If your business is not eligible for small employers’ relief, the lower relief of 92% may be available, so it’s worth exploring.
How much are statutory parental payments?
If an employee is eligible for a statutory parental payment, there are numerous options available to them, depending on their unique situation.
Below are some statutory parental payments and how much an employee can expect to receive:
- Statutory maternity pay: 90% of your average pre-tax weekly earnings for the first six weeks in the 2024/25 tax year and the lower of £184.03 or 90% of earnings for the following 33 weeks.
- Statutory paternity pay: The lower of £184.03 or 90% of average weekly earnings for one or two weeks.
- Statutory adoption pay: 90% of your average weekly earnings for the first six weeks and the lower of £184.03 or 90% of earnings for the following 33 weeks.
- Statutory parental bereavement pay: The lower of £184.03 or 90% of average weekly earnings for two weeks.
- Statutory shared parental pay: The lower of £184.03 or 90% of average weekly earnings – new parents can share up to 37 weeks of pay.
Who is eligible for small employers' relief?
Your company is eligible for small employers’ relief if it paid £45,000 or less in Class 1 national insurance contributions over the last tax year, excluding reductions such as the employment allowance.
This needs to occur before:
- The ‘qualifying week,’ which is the 15th week before the week of the child’s due date.
- The ‘matching week,’ when an employee is informed they have been matched with a child by the adoption agency or the date on the official notification if adopting a child from another country.
- The ‘qualifying week,’ which is the week before a stillbirth or death of a child.
How do you apply for small employers’ relief?
You can use specialist payroll software to calculate your small employers’ relief and include this in your Employer Payment Summary (EPS).
If you don’t use payroll software, you can ask HMRC to make a repayment, but you can’t do this until the new tax year begins.
Get expert financial help
Running a business can be intense, but you don’t have to do it alone.
A qualified accountant can help you with your business goals, whether you’re hoping to use any tax allowances or reliefs, manage cash flow, plan to expand your company, or seek funding.
Unbiased can quickly match you with a qualified accountant to help you grow your business.
:quality(20))