Many employers are aware that they must make statutory payments to eligible employees.
What is often overlooked is that, in many cases, some or all of those costs can be reclaimed from HMRC.
If your business employs staff, understanding what you can reclaim could help improve cash flow and ensure you’re not missing out on valuable financial support.
What statutory payments can employers reclaim?
Employers may be required to make a range of statutory payments to employees who meet the qualifying conditions.
These include:
- Statutory Maternity Pay (SMP)
- Statutory Paternity Pay (SPP)
- Statutory Adoption Pay (SAP)
- Statutory Shared Parental Pay (SSPP)
- Statutory Parental Bereavement Pay (SPBP)
- Statutory Neonatal Care Pay (SNCP)
However, different rules apply to Statutory Sick Pay (SSP).
From 6 April 2026, employees are entitled to SSP from the first day of sickness absence, but employers cannot reclaim the cost from HMRC.
How much can employers reclaim?
The amount your business can recover depends on its size.
Many smaller employers qualify for Small Employers’ Relief, which allows them to reclaim more than the amount they have paid out.
From 6 April 2026, eligible employers can reclaim 109% of statutory payments such as SMP, SPP, SAP, SSPP, SPBP and SNCP.
This means HMRC not only repays the statutory payment itself but also provides additional compensation towards the associated employer costs.
Do you qualify for Small Employers’ Relief?
A business is generally considered a small employer if it paid £45,000 or less in Class 1 National Insurance contributions in the relevant tax year.
Importantly, this figure is calculated before deducting any Employment Allowance.
The qualifying period depends on the type of statutory payment being claimed, but the principle remains the same: HMRC looks at your National Insurance liability to determine whether you qualify for enhanced relief.
If you’re unsure whether your business meets the criteria, it’s worth checking before making a claim.
How do employers make a claim?
The process is relatively straightforward.
Claims are usually made through your payroll software using an Employer Payment Summary (EPS).
The amount being reclaimed is then offset against the PAYE and National Insurance that your business owes to HMRC.
This can reduce the amount you need to pay over each month.
What if the claim is larger than your PAYE bill?
Sometimes the amount being reclaimed is greater than the PAYE and National Insurance liability for the period.
If this happens, your business can request a repayment from HMRC.
The claim for repayment cannot normally be made until the start of the next tax year.
For many small businesses, this can provide a welcome cash flow boost.
What if your business can’t afford to make the payments?
Businesses experiencing financial difficulties may be able to apply for advance funding from HMRC.
This allows employers to receive financial support before making statutory payments to employees.
Applications for advance funding can generally be made up to four weeks before the first payment is due.
This can be particularly helpful for smaller businesses where cash flow is tight.
Don’t forget your Employer Payment Summary
Even if your business receives advance funding, you must still submit an Employer Payment Summary (EPS) for each period in which statutory payments are reclaimed.
It’s also worth noting that any advance funding may be reduced if your business has outstanding amounts owed to HMRC.
Are you claiming everything you’re entitled to?
Many employers focus on making statutory payments correctly but don’t always check whether they’re recovering the maximum amount available.
Making the right claim can help protect cash flow and ensure your business receives the support it is entitled to.
If you’re unsure whether your business qualifies for Small Employers’ Relief, need help with payroll reporting, or want to check that you’re reclaiming statutory payments correctly, contact Jon or the team at Jon Davies Accountants.
We’ll help you stay compliant, maximise your claims and keep your payroll running smoothly.
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Any questions?
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