Statutory Neonatal Care Pay is paid to eligible parents whose baby, born on or after 6 April 2025, starts neonatal care within 28 days of birth and stays in care for at least 7 consecutive full days. Each block of 7 full days in care gives one week of leave, and potentially one week of pay, up to a maximum of 12 weeks. For 2026 to 2027 the weekly rate is £194.32 or 90% of average weekly earnings, whichever is lower.

What are neonatal care leave and Statutory Neonatal Care Pay?

The Neonatal Care (Leave and Pay) Act 2023 created two separate rights for parents of babies who need specialist care after birth: a right to Neonatal Care Leave and a right to Statutory Neonatal Care Pay (SNCP). The pay rules sit in section 171ZZ16 onwards of the Social Security Contributions and Benefits Act 1992 and the Statutory Neonatal Care Pay (General) Regulations 2025, with administration rules in the Statutory Neonatal Care Pay (Administration) Regulations 2025 (SI 2025/206). The leave rules are in the Neonatal Care Leave and Miscellaneous Amendments Regulations 2025 (SI 2025/375).

Both rights apply only to babies born on or after 6 April 2025 and only to employees in England, Scotland and Wales. HMRC’s Statutory Payments Manual at SPM167100 confirms that SNCP is not yet available to employees working in Northern Ireland. HMRC administers the pay, so employers deal with HMRC on payment, records and recovery.

What counts as neonatal care?

Neonatal care is care that starts in the first 28 days after birth. Regulation 4 of the General Regulations, summarised at SPM168000, lists three types:

  • medical care received in a hospital
  • medical care received elsewhere after the baby has been an inpatient in hospital, provided it is under the direction of a consultant and includes ongoing monitoring and visits from healthcare professionals arranged by the hospital
  • palliative or end of life care

The baby must spend at least 7 consecutive days in neonatal care for any entitlement to arise. HMRC’s guidance at SPM167400 says the first 7 day period begins with the day after the day on which the care starts, and each complete period of 7 days gives one week. Part weeks do not count.

Which employees qualify for the leave and which qualify for the pay?

The relationship test is the same for both. The employee must be taking the time to care for the baby and must be either the baby’s parent (biological, adoptive, or an intended parent in a surrogacy case who applies for a parental order within 6 months of birth) or the partner of the baby’s mother with shared caring responsibility. Adopters qualify once the child is placed with them.

The employment tests differ:

Test Neonatal Care Leave Statutory Neonatal Care Pay
Status Employee with an employment contract Employee with an employment contract
Length of service None, a day one right 26 weeks’ continuous employment up to the end of the relevant week
Earnings No test Average weekly earnings of at least £129 over an 8 week period
Still employed Not applicable Up to the week before the pay starts

The relevant week is normally the week immediately before the baby enters neonatal care. If the employee is already entitled to Statutory Maternity Pay or Statutory Paternity Pay, the 15th week before the expected week of birth is used instead, and for an adopter receiving Statutory Adoption Pay it is the week they were told they had been matched. The £129 figure matches the lower earnings limit for Class 1 National Insurance for 2026 to 2027 published in HMRC’s rates and thresholds for employers.

How is the leave taken, and what are tier 1 and tier 2?

GOV.UK and SPM167200 describe two tiers. Tier 1 covers leave taken while the baby is in neonatal care or in the week after it leaves. Tier 1 leave can be taken in separate blocks of at least one week, so a father can take some neonatal leave, then prebooked paternity or shared parental leave, then the rest of his neonatal leave. Tier 2 is leave taken more than a week after the baby has left neonatal care, and it must be one continuous block, before or after any other parental leave.

All leave and pay must be taken within 68 weeks of the baby’s birth. If the mother is on Statutory Maternity Leave, or an adopter is on Statutory Adoption Leave, the neonatal leave is added to the end of that leave rather than running alongside it. GOV.UK gives the example of a baby in neonatal care for 56 days: the mother adds 8 weeks to the end of her 39 weeks of maternity leave.

Where twins are in neonatal care at the same time, the parent can only claim for one of them, up to 12 weeks.

What notice does the employee have to give?

Notice rules are deliberately light during tier 1. The employee should tell the employer as soon as possible, ideally before their usual start time on the first day, and may do so by phone, voicemail or text. If leave continues, they give notice again by the end of the previous week, unless a different frequency is agreed. Notice for pay must be in writing and given within 28 days of the start of the leave.

For tier 2, written notice is required for both leave and pay: 15 days for a single week and at least 28 days for two weeks or more. The notice should give the baby’s date of birth, the dates of the neonatal care, the intended start of leave and the number of weeks. For pay, the employee must also confirm they are taking the time to care for the baby and have the necessary relationship, which can be done on HMRC form NEO3, by letter or email, or on the employer’s own form.

Tier 1 notices cannot be cancelled. Tier 2 leave or pay can be cancelled in writing at least 15 days before a single week was due to start, or 28 days before a longer block.

How does the employer pay and record SNCP?

SNCP is paid through payroll on the employee’s normal pay date. All statutory payments are earnings for income tax and National Insurance, so the usual deductions apply.

An employee cannot receive SNCP for any week in which they are entitled to Statutory Sick Pay; SPM167700 says they get SSP instead and can rearrange the neonatal leave afterwards, as long as it still ends within the time limit. If the employer decides the employee is not entitled to SNCP, it must tell them within 28 days of receiving notice for pay, either by letter or on form NEO1, giving the reason. An employee who disagrees can go to HMRC’s Statutory Payments Dispute Team within 6 months of the decision.

Records must show the start date of each pay period, payments made and their dates, any weeks claimed but not paid with the reason, the employee’s written declaration, the baby’s name and the dates neonatal care started and ended. They must be kept for 3 years from the end of the tax year they relate to, and form NEO2 can be used. Employment rights are protected during the leave. If the employee is made redundant, any outstanding SNCP must still be paid, and it remains payable even if the employer stops trading.

Can the employer get the money back?

Yes. SNCP is recovered like maternity pay, through the Employer Payment Summary: 92% for most employers in 2026 to 2027, or 109% with Small Employers’ Relief. The detail, including advance funding, is in our guide to recovering statutory payments.

How does this work in practice?

Illustration only. An employee’s baby is born on a Monday and goes straight into the neonatal unit the same day. The baby is discharged after 23 full days in care. Counting from the day after care started, that is three complete periods of 7 days, so the employee is entitled to 3 weeks of Neonatal Care Leave.

The employee has worked for the business for two years and has average weekly earnings of £600. Ninety per cent of that is £540, which is above the standard rate, so SNCP is £194.32 a week, or £582.96 for the 3 weeks, taxed through payroll. If the business qualifies for Small Employers’ Relief it reclaims 109% of the payment, £635.43, on its Employer Payment Summary. If the employee had joined only three months earlier, they would still get the 3 weeks of leave but no statutory pay.

What mistakes do employers commonly make?

  • Refusing leave because the employee has short service. The 26 week test applies only to pay.
  • Counting part weeks, or counting from the day care started rather than the day after.
  • Insisting on written notice for tier 1 leave, when phone or text is allowed.
  • Running neonatal leave alongside maternity leave instead of adding it at the end.
  • Paying SNCP for a week in which Statutory Sick Pay is due.
  • Missing the 28 day deadline to tell an employee they do not qualify, or not keeping the declaration.

Statutory payments are routinely looked at in an HMRC employer compliance check, so the declaration and care dates should be on file before the first payment. The Employment Allowance does not affect the Small Employers’ Relief test. Employers wanting cover for the professional cost of a payroll enquiry can read about tax investigation insurance for employers.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.