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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

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