Tax and NI on SMP

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

Direct answer

Yes, SMP is taxable

SMP is treated as earnings for income tax and Class 1 NI. Your employer deducts both at source through PAYE on your usual tax code. Because SMP is usually lower than your normal salary, many employees end the tax year having used less than their full personal allowance and receive a refund automatically through the next year-end reconciliation.

Income tax on SMP

Apply your tax code as normal. With the 2026/27 personal allowance of 12,570, most employees on SMP only pay basic rate tax once their year-to-date earnings exceed that figure. For higher earners who already used the personal allowance before leave started, basic rate at 20% applies to SMP up to the 50,270 basic rate limit.

National Insurance on SMP

Class 1 employee NI applies. For 2026/27: 0% to the Primary Threshold of 242 per week, 8% to the Upper Earnings Limit of 967 per week, 2% above. On the flat-rate 194.32 per week, NI is zero because the amount is below the PT.

Student loan deductions

Student loan repayments continue if your year-to-date earnings exceed the plan threshold. On SMP-only weeks at 194.32 (annualised to 10,104), most plans do not trigger deductions, but if you had high earnings earlier in the tax year your year-to-date figure may still be above the threshold.

Will I get a tax refund?

Often yes. If your total earnings for the tax year (salary up to leave start, then SMP) are below your full personal allowance times the proportion of the year worked, HMRC issues a refund through the next year-end reconciliation or via a P800. You do not normally need to file a Self Assessment for this.