Is Statutory Sick Pay Taxed? SSP Rates and Rules 2026/27

Yes — Statutory Sick Pay (SSP) is taxable. It counts as earnings from your employment, so your employer pays it through payroll and deducts income tax and National Insurance in the normal way, using your usual tax code.

That does not always mean you actually lose tax on it. Because PAYE works cumulatively, a month on SSP alone often produces a refund in your payslip, and if your total income for the year stays under the £12,570 Personal Allowance you pay no income tax on the SSP at all.

Key points

• SSP is taxable pay: income tax and Class 1 National Insurance apply, deducted at source through PAYE.
• There is no separate "sick pay allowance" — SSP simply uses your Personal Allowance and tax bands like wages do.
• SSP is usually well below the £1,048-a-month National Insurance threshold, so in a full SSP month you often pay no employee NI.
• A drop in pay part-way through the tax year commonly means you have overpaid tax to date, and cumulative PAYE refunds it automatically.
• From April 2026 the three "waiting days" and the Lower Earnings Limit test are due to be removed, with low earners paid a percentage of their normal weekly earnings instead of the flat rate.

Is SSP taxable?

SSP is a statutory payment made by your employer, not a state benefit paid to you by DWP. In tax law it is treated as earnings from employment, which means:

• it goes through your employer's payroll and is reported to HMRC under Real Time Information;
• income tax is deducted using your tax code;
• Class 1 National Insurance is due on it, for both you and your employer, if the amount in the pay period exceeds the relevant threshold;
• it appears in your gross pay figure on your payslip, your P60 and (if you leave) your P45.

You do not declare SSP separately on a Self Assessment return. It is already inside the "pay from this employment" figure on your P60, so you just copy that across.

National Insurance on SSP

Employee Class 1 NI is charged at 8% on earnings between the primary threshold of £12,570 a year and the upper earnings limit of £50,270, then 2% above that. NI is worked out pay period by pay period, not cumulatively, so a monthly-paid employee pays nothing until earnings in that month top roughly £1,048 (£12,570 ÷ 12). SSP on its own is normally far below that, so most people receiving only SSN for a full month pay no employee NI on it.

Employer NI is different. The secondary threshold is £5,000 a year — about £416.67 a month — and the rate is 15%. So an employer paying £480 of SSP in a month owes 15% on £63.33, which is £9.50. Employers have not been able to reclaim SSP from HMRC since the Percentage Threshold Scheme was withdrawn, so SSP is a real cost to the business.

Company sick pay and benefits are treated differently

• Occupational (contractual) sick pay — fully taxable and NI-able, exactly like wages.
• Contribution-based Employment and Support Allowance — taxable, and paid without tax deducted, so it can create an underpayment. Income-related ESA is not taxable.
• Universal Credit, Personal Independence Payment and Attendance Allowance — not taxable.
• Payouts from a personal income protection policy you paid for yourself — generally tax-free, because you funded the premiums from taxed income. Employer-funded group income protection paid through payroll is taxable.

SSP rates and rules for 2026/27

SSP is a flat weekly amount, uprated each April. The rate was £118.75 a week in 2025/26; the 2026/27 figure follows the annual uprating order.

SSP is paid for qualifying days — normally the days you would ordinarily have worked. If you work three days a week, a full week of SSP is split across those three days, so a single day of sickness is worth a third of the weekly rate rather than a fifth.

What changes in April 2026

The Employment Rights Act 2025 makes two structural changes to SSP that the Government's implementation timetable put at April 2026.

1. SSP from day one

Until now the first three qualifying days of sickness have been unpaid "waiting days", with SSP starting on day four. Removing them means SSP is payable from the first qualifying day of absence. For short illnesses this is the bigger of the two changes: a four-day absence moves from one paid day to four.

2. No Lower Earnings Limit test

SSP has always required average weekly earnings of at least the Lower Earnings Limit (£125 a week in 2025/26). Part-timers below that got nothing. The reform scraps the earnings floor, and pays lower earners a percentage of their normal weekly earnings where that percentage is less than the flat rate — the figure legislated for was 80%.

Worked example: a low earner after the change

Priya works eight hours a week at £13.75 an hour, so her normal weekly earnings are £110. She is off sick for two full weeks.

• 80% of £110 = £88 a week, which is less than the flat rate, so £88 is the amount payable.
• Two weeks of SSP = £176.
• Her earnings for the year are far below £12,570, so no income tax is due, and £88 a week is below the £242-a-week NI threshold, so no employee NI either.
• Under the old rules she was below the Lower Earnings Limit and the first three days were waiting days, so she would have received nothing.

So the SSP is taxable in principle, but produces a nil tax deduction in practice. That is the pattern for most low earners: the payment is inside the tax system, but the Personal Allowance soaks it up.

Sick pay and your tax code

Your tax code does not change because you are sick. What changes is the amount of pay running through it — and because PAYE is cumulative, that usually works in your favour.

Each pay period, PAYE compares the tax you have paid so far this tax year with the tax due on your pay to date. If your pay falls, the tax due to date falls too, and your employer refunds the difference in that payslip.

Worked example: a refund in a sick month

Tom earns £30,000 a year, paid £2,500 a month, tax code 1257L, in England. He is off sick for the whole of month 4 and receives four weeks of SSP totalling £480 (illustrative, at £120 a week).

1. Tax-free pay per month: £12,570 ÷ 12 = £1,047.50.
2. Tax in each of months 1–3: (£2,500 − £1,047.50) × 20% = £290.50, so £871.50 paid so far.
3. Pay to date at month 4: (£2,500 × 3) + £480 = £7,980.
4. Tax-free pay to date: £1,047.50 × 4 = £4,190.
5. Taxable to date: £7,980 − £4,190 = £3,790. Tax due at 20% = £758.
6. Tax already paid £871.50, tax due £758 → Tom receives a £113.50 refund in his month 4 payslip.

No employee NI is due on the £480, because it is under the £1,048 monthly threshold — but NI is not cumulative, so the NI already paid in months 1–3 is not refunded.

When the automatic refund does not happen

• Your code is on a Week 1/Month 1 basis. Each period is taxed in isolation, so no cumulative refund arrives. Any overpayment is settled after the tax year ends.
• Your employment ends during the sickness. Take your P45 to the next employer so the cumulative calculation continues; if you do not work again that year, HMRC reconciles it after 5 April and issues a P800.
• You have a second job or a BR or D0 code on it. Losing pay in the main job can leave allowances unused and tax overpaid on the other job. It is worth asking HMRC to reallocate the code.
• You are getting taxable ESA as well. DWP does not deduct tax from it, so HMRC may adjust your code or bill you later.

Scotland

SSP is non-savings income, so Scottish income tax rates apply if you are a Scottish taxpayer — the starter rate of 19% on the first £3,967 above the Personal Allowance, then 20%, 21%, 42%, 45% and 48%. The National Insurance treatment is identical across the UK. In practice a Scottish employee on SSP alone for a month tends to see the same kind of cumulative refund, just calculated on Scottish bands.

What if your employer will not pay

If your employer refuses SSP they should give you form SSP1 explaining why, which you can use to claim ESA or Universal Credit. If you disagree, you can ask HMRC's statutory payment dispute team to decide. The official rules are on GOV.UK's Statutory Sick Pay guidance.

What to do next

Work out how much SSP you are owed and what lands after deductions with the statutory sick pay calculator. If a long absence has cut your annual income, run the year's total through the income tax calculator to see whether you have paid more tax than you owe — and check your payslips for a refund that should have come through automatically.