NEW Articles30 Oct 2026
Are you ready for payrolling benefits in kind?
Payrolling of benefits in kind - what it means for employers and employees.
Articles
Although far less generous than last year’s increase, the rate of compensation paid to smaller employers for administering statutory payments will go up from 8.5% to 9% from 6 April 2026.
While employers may welcome extra funding, the small increase will not compensate for higher rates of minimum wage or for the cost of the new ‘day one’ rights for all employees, both coming into effect from 6 April 2026.
Recovery
Employers can usually reclaim 92% of statutory payments, but smaller employers can recover 100% of the cost, along with the 9% compensation. The total rate of recovery will therefore be 109% from 6 April 2026.
For example, if statutory maternity pay of £1,000 is paid, the normal recovery is £920. However, a smaller employer will recover £1,090.
Statutory payments for maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay are recoverable; but not statutory sick pay.
Smaller employers
An employer is classed as small for statutory payments purposes if their total class 1 national insurance contribution (NIC) payments were £45,000 or less for the tax year before the employee’s qualifying week:
Relief is claimed on a monthly basis through payroll software using the employer payment summary.
HMRC’s guide to getting financial help with statutory pay can be found here.
THE AUTHOR
Senior Manager, Payroll
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