Reclaiming statutory maternity pay as a small employer

How much statutory maternity pay can you reclaim?

There are two reclaim rates, and which one you get depends only on the size of your National Insurance bill last year:

• 109% - Small Employers' Relief. If your total Class 1 National Insurance (employee + employer contributions together) in the previous tax year was £45,000 or lower, you reclaim 109% of the SMP you pay from 6 April 2026. It was 108.5% in 2025/26, so the relief has nudged up this year - see the official rates and thresholds for employers 2026 to 2027.
• 92% - the standard rate. Everyone else reclaims 92%, leaving a modest net cost of 8% of the SMP paid.

The same two rates apply to statutory paternity, adoption, shared parental, neonatal care and parental bereavement pay - it's one scheme covering the whole family-leave set, per gov.uk.

Do I pass the £45,000 small employer test?

The test is simpler than it sounds. Take the previous tax year (for 2026/27 reclaims, that's 2025/26) and add up all the Class 1 National Insurance you paid over to HMRC - both the employees' contributions you deducted and your employer contributions. If the total is £45,000 or lower, you're a "small employer" and reclaim at 109%. Above £45,000, you reclaim at the standard 92%.

A few things people trip over: it's the NI bill that matters, not headcount or turnover; it's employee and employer contributions combined, not just the employer's share; and it's judged on the year before the one you're reclaiming in, so a growing business can qualify this year even if it won't next year. Your payroll software or accountant can read the total straight off last year's records.

How does the reclaim actually happen?

You don't fill in a claim form or wait for a cheque. The reclaim runs through payroll:

• You pay SMP to the employee through the normal payroll run, like ordinary wages.
• Your payroll software works out the 92% or 109% recovery and reports it on an Employer Payment Summary (EPS), sent to HMRC via RTI.
• The amount is set off against the PAYE tax and National Insurance you'd otherwise pay HMRC that month, so the money comes back as a smaller PAYE bill.

And if you genuinely can't afford to make the payments in the first place - common for a micro business facing 39 weeks of SMP for a key person - you can apply to HMRC for advance funding, so the money lands in your account before payday rather than being recovered afterwards. Details are on gov.uk's recover statutory payments page.

What does a full maternity leave cost in real numbers?

First, a reminder of what SMP actually is in 2026/27. An employee qualifies for pay with 26 weeks' continuous employment into the qualifying week and average earnings of at least £129 a week (the Lower Earnings Limit). The pay itself runs for 39 weeks:

Now the worked example. Say your employee's average weekly earnings are £480:

• First 6 weeks: 90% × £480 = £432 a week → 6 × £432 = £2,592.
• Next 33 weeks: £194.32 (lower than £432) → 33 × £194.32 = £6,412.56.
• Gross SMP paid: £2,592 + £6,412.56 = £9,004.56.

Here's what each type of employer gets back on that £9,004.56:

The small employer literally recovers more than it paid - the extra £810 or so exists to cover the employer National Insurance charged on SMP. Want these figures for your own employee's earnings? Our maternity pay employer calculator does the whole sum - SMP schedule, reclaim rate and net cost - so you can see your own numbers in seconds. For every 2026/27 figure in one place, see statutory rates for 2026/27.

What can't you reclaim?

The scheme covers statutory pay only. If you offer enhanced or contractual maternity pay - say full pay for the first 12 weeks, or a top-up to 100% of salary - everything above the statutory rate is your cost alone; none of it is reclaimable. That's not a reason to avoid enhancing (it's a powerful retention tool), but budget for it with clear eyes: the reclaim maths above applies to the statutory layer, and the enhancement sits on top at full price.

The good news is that the reclaimable set is broad. Statutory paternity pay (a day-one right from 2026), adoption pay, shared parental pay, neonatal care pay and parental bereavement pay all reclaim at the same 92% or 109% as SMP.

How CoDash keeps the numbers straight

The reclaim only works if payroll gets the right inputs: leave dates, the qualifying week, average weekly earnings and which statutory scheme applies. CoDash tracks family-leave plans, key dates and statutory entitlements in one place, so what reaches payroll - and your EPS - is right first time. See how it fits into time off and absence.

Frequently asked questions