Sick Pay Calculator

For the 2026/27 tax year, the standard SSP rate is £123.25 per week, payable for up to 28 weeks. Employees qualify if they earn at least £123 per week on average and have been ill for four or more consecutive days. Employers must pay this regardless of the employee's contract, provided they meet the minimum earnings threshold.

The VAT registration threshold remains at £90,000 for the 2026/27 period, meaning businesses below this turnover do not need to register for VAT. While sick pay is not subject to VAT, maintaining accurate records of all payroll costs is essential for MTD ITSA compliance if your turnover approaches the £50,000 threshold from April 2026. Ensure your accounting software separates VAT-exempt payroll data from taxable supplies.

You are not legally required to pay company sick pay unless your employment contract explicitly states otherwise. Many employers top up SSP to a percentage of normal wages, but this is voluntary under current UK law. If you do offer enhanced pay, remember that this is treated as earnings and subject to income tax and National Insurance deductions.

From April 2026, employers pay 15% National Insurance on earnings above £5,000 per year per employee. Sick pay counts as earnings, so you must include it in your total payroll costs when calculating the 15% liability. This rate applies to all employees regardless of whether they are on full pay or statutory sick pay.

For the 2026/27 tax year, the dividend allowance is £500, with tax rates of 10.75% for basic rate, 35.75% for higher rate, and 39.35% for additional rate taxpayers. These rates apply to dividend income exceeding the £500 allowance and are in addition to any income tax due on other earnings. Dividend payments are not eligible for Statutory Sick Pay calculations.