Running a small business comes with its fair share of challenges, especially when it comes to managing employee benefits. Let’s dive into a topic that could potentially save you money and improve your cash flow: Small Employers’ Relief (SER).
What’s Small Employers’ Relief All About?
Imagine being able to claim back 103% of certain statutory payments you make to your employees. Sounds good, right? That’s exactly what SER offers to qualifying small businesses. This relief applies to statutory maternity, paternity, adoption, parental bereavement, and shared parental pay.
Are You Eligible?
You might be wondering if your business qualifies. The key factor is your National Insurance contributions. If you paid £45,000 or less in Class 1 NI contributions in the tax year before your employee’s qualifying week, you’re in!
What’s a ‘qualifying week’?
It varies depending on the type of leave:
- For maternity pay, it’s the 15th week before the due date
- For adoption, it’s when your employee is matched with a child
- For overseas adoption, it’s the date on the official notification
- For parental bereavement pay, it’s the week before the child’s death or stillbirth
Show Me the Money!
If you qualify, you can claim back 100% of the statutory payments plus an extra 3%. That’s right, you get back more than you paid out! Even if you don’t qualify for SER, you can still usually claim 92% relief. Not too shabby, right?
SER and Employment Allowance: Separate but Equal
Here’s an important point: Employment Allowance doesn’t affect your SER eligibility. They’re separate schemes, so don’t worry about one impacting the other. You could potentially benefit from both!
Claiming Your Relief
The good news is that claiming SER is usually just a matter of a few clicks in your payroll software. Xero can automatically calculate and include your relief in your Employment Payment Summary (EPS). Depending on your circumstances you’ll either see a reduction of the amount you pay over to HMRC for the relief claimed, or you’ll need to request a repayment from HMRC.
No suitable software? No problem. You can write to HMRC for a repayment, but you’ll need to wait until the new tax year begins. Another reason to get yourself set up on Xero!!
Xero Users, Listen Up!
If you’re using Xero, setting up SER is a breeze. To set this up, you’ll need to follow these steps:
- Select ‘Payroll’, and navigate to ‘Payroll Settings’.
- Click on the ‘HMRC’ tab.
- Where it says ‘Are you eligible for Small Employers’ Relief?’ select ‘Yes’.
And Xero will do all the rest.
And even better – as a PPF client we take care of this automatically for you as part of our Payroll Service.
Small Employers’ Relief can be a real financial boost for your business. It’s one of those rare opportunities where you can get back more than you put in. So, if you think you might be eligible, don’t leave this money on the table. Check your NI contributions, set up your software, and start benefiting from SER today!
Got questions about SER or other ways to optimise your business finances? Pop over to our Get Started page and complete the Quick Questionnaire to book a call with one of our team.
