Small employers' relief
If you pay your employees any statutory maternity pay (SMP), statutory paternity pay (SPP), statutory adoption pay (SAP), and shared parental pay (ShPP), you can reclaim some or all of it.
How much you can reclaim depends on whether you’re classed as a small employer or not. If you’re a small employer, you can reclaim 100% of the payment, plus an extra 3% relief. If you’re not a small employer, you can still reclaim 92%.
You reclaim the relief when you record your P32 payment to HMRC and submit your employer payment summary (EPS). Your submission is monthly or quarterly, depending on your HMRC reporting frequency.
If you’re unsure which reporting frequency you’re on, you should check this with HMRC.
Your company qualifies for small employers’ relief if the total of your employer and employee liability for national insurance (NI) contributions was £45,000 or less in the last complete tax year prior to the employee’s qualifying week, or in the case of adoption, the matching week.
For babies due between 22 July 2020 and 20 July 2021 - Check the liability for 2019/20.
For babies due from 21 July 2021 - Check the liability for 2020/21.
If you weren’t an employer for some or all of the tax year prior to the employee’s qualifying week, you must check your small employers’ relief status with HMRC.
You must process all pay runs and submit your full payment submissions (FPS) for your first P32 reporting period, before you can reclaim small employers’ relief.
Your EPS submission is monthly or quarterly, depending on your HMRC reporting frequency.
- Complete all pay runs for month one or quarter one.
- Go to Summary, then click Record Payment / EPS.
- On the Eligible for small employer’s relief list, click Yes.
You can also state whether you’re eligible for employment allowance in the EPS submission.
- Enter payment date, then click Next.
- If applicable, enter any CIS deductions suffered.
- Click Next.
- Enter your Government Gateway credentials, if not already saved.
- Click Submit.
You’ve successfully reclaimed small employers’ relief and your liability to HMRC automatically reduces and shows on the P32 Employer Payment Record.