Small Employers Relief explained

Edited by Oliver Wakefield-Smith, Founder of Digital Signet. Last reviewed 23 June 2026.

Direct answer

What is the SER threshold?

45,000Class 1 NI in the prior tax year

Small Employers Relief lets you reclaim 103% of SMP paid, rather than the standard 92%. You qualify if your total Class 1 NI bill (employer and employee combined) in the previous tax year was 45,000 or less. The threshold has been unchanged for many years and is not indexed.

The test in detail

Look at your prior tax year (the year ending the previous 5 April). Total Class 1 NI is the employer NI plus the employee NI deducted through PAYE, before any offsets. If this aggregate is 45,000 or less, you are a small employer for SMP recovery purposes in the current tax year.

Why the threshold matters

Small Employers Relief converts SMP from a partial cost into a small profit. Reclaiming 103% means HMRC pays back the full SMP plus a 3% uplift to cover the employer NI on the SMP. For an employer paying 9,500 of SMP across a 39-week leave, the SER uplift is approximately 285.

Claiming SER

There is no separate application. You claim by reporting SMP through the FPS as normal and the SER reclaim amount through the EPS. HMRC checks the prior-year NI bill from its own records.

Borderline cases

If your prior-year NI was close to 45,000, model it carefully. Crossing the threshold by even 1 means standard 92% reclaim, not 103%, which can be a material swing for a small business with two or more employees on SMP at the same time.