HMRC have communicated with software developers about a change in the rate of National Insurance Contributions Compensation (NICs Comp) when the employer makes a payment of the following on tax year 2025/26:
- Statutory Maternity Pay;
- Statutory Adoption Pay;
- Statutory Paternity Pay;
- Statutory Parental Bereavement Pay;
- Statutory Shared Parental Pay; and / or
- Statutory Neonatal Pay
Currently, where an employer has paid £45,000 or less in Class 1 National Insurance (ignoring any reductions like Employment Allowance) in the last complete tax year they can qualify for Small Employers Relief. This means that they can reclaim 100% of the statutory payment and an additional 3% NICs Comp.
For payments made in tax year 2025/26, the rate of NICs Comp increase from 3% to 8.5% meaning that a qualifying employer will be able to recover 108.5% of the statutory payment.
For Bookkeepers
The percentage of NICs Comp has not changed for years and years and, at a time when NICs costs are increasing for employers, this increased percentage is to be welcomed.
Members should note two things:
1. The Small Employers Relief threshold remains at £45,000, another value that has not changed for many years; and
2. It is always important for employers to indicate in payroll software that they are entitled to be classed as a Small Employer