Small Employers’ Relief (SER): what it is & how to claim
In this short guide, we’ll explain what Small Employers’ Relief is, who’s eligible, and how you can claim it.
What is Small Employers' Relief?
Small Employers’ Relief is a scheme that allows qualifying small businesses to claim 100% plus an additional 3% of their employees’ statutory maternity, paternity, adoption, parental bereavement, and shared parental pay.
If you run a small business, relief from schemes like Small Employers’ Relief can help you save money and improve cash flow as you don’t need to foot the bill for certain statutory payments.
Businesses that don’t qualify for SER can usually claim relief at a lower rate of 92%.
Do I qualify for Small Employers’ Relief?
Yes, if you made Class 1 National Insurance contributions of £45,000 or less in the previous tax year ahead of an employee’s qualifying week. Examples of qualifying weeks are as follows:
- The 15th week before the due date week.
- The week your employee was notified by an adoption agency that they’d been matched with a child.
- The date on the official notification, for employees adopting a child from another country.
- The week before the death of a child or stillbirth for statutory parental bereavement pay.
What counts as a ‘small employer’?
HMRC considers businesses that make Class 1 National Insurance contributions of £45,000 or less in a full tax year to be small employers.
How much SER can you claim?
If you’re a qualifying business, you can claim 100% of the statutory payments made and an additional 3% relief.
If your business doesn’t qualify for SER, you’ll usually be able to claim 92% relief.
Small Employers' Relief and employment allowance
When calculating the threshold for Small Employers' Relief you do not need to take employment allowance into consideration. The schemes work separately, so employment allowance doesn’t contribute towards the £45,000 threshold.
If you claimed £5,000 in employment allowance and paid £47,000 in Class 1 National Insurance contributions, this won't bring your total down to £43,000. In this scenario, you wouldn’t be eligible for SER.
On the other hand, if you claimed £5,000 in employment allowance and paid £42,000 in Class 1 National Insurance contributions, you could also claim SER.
How do you claim Small Employers' Relief?
Cloud-based software can automatically calculate the relief you’re entitled to and include this in your Employment Payment Summary (EPS). If you’re registered for VAT, you might already have cloud-based software with payroll features that allows you to process employees’ statutory maternity and paternity, along with claiming the relief.
If you’re unable to claim relief through payroll software, you can also write to HMRC and ask for a repayment. But you’ll need to wait until the beginning of the new tax year to do this.
How to claim Small Employers’ Relief through Xero
Xero can automatically calculate the amount to reclaim and share your monthly Employment Payment Summary (EPS) with HMRC.
To set this up, you’ll need to follow these steps:
- Select ‘Payroll’, and navigate to ‘Payroll Settings’.
- Click on the ‘HMRC’ tab.
- Where it says ‘Are you eligible for Small Employers’ Relief?’ select ‘Yes’.
- Click ‘Save’.
Cash flow advice for small businesses
Keeping track of what you’re entitled to doesn’t have to be complicated. Xero can help you run a healthy business, no matter the size.
For more helpful information on how you can make savings and improve your cash flow, check out our cash flow advice hub.