The Job Retention Bonus explained
On 2 October, HMRC published a Treasury Direction which modifies the Coronavirus Job Retention Scheme (CJRS) to establish the Coronavirus Job Retention Bonus.
What is the Coronavirus Job Retention Scheme Bonus?
In broad terms, the £1000 bonus is available for employers in respect of any employee whom they have previously furloughed under the CJRS but whom they continue to employ through to 31 January 2021. Employers who also use the Job Support Scheme will still be able to claim the bonus.
The purpose of the CJRS Bonus
In order to be able to claim the bonus, of £1,000 per qualifying employee from 15 February 2021, various eligibility requirements will need to be met. The bonus does not need to be paid to the employee but the Direction makes it clear that the purpose of the Job Retention Bonus scheme is to ‘continue the employment of employees whose activities have been adversely affected by coronavirus’ therefore employers may need to be able to demonstrate that they have used the bonus to do this at a later date. The extent to which HMRC will seek to verify how employers have used any Bonus is unclear.
Which employers are eligible?
To qualify to claim the bonus, the Direction provides that an employer must have:
- a PAYE scheme which was registered on HMRC’s real time information system for PAYE;
- made a CJRS claim in respect of the employee; and
- delivered the required information to HMRC in relation to all relevant PAYE payments made by the employer in the period beginning on 6 April 2020 and ending on 5 February 2021.
HMRC will also not pay the bonus if the employer made an incorrect CJRS or has since repaid any claim, regardless of the reason why the repayment was made.
How does an employee qualify?
In order to claim for the bonus the employee must be a ‘qualifying employee’. To be a qualifying employee:
- the employer must have made a CJRS claim in respect of the employee;
- the employer must have employed the employee for the whole of the period beginning immediately after the end of period covered by the CJRS claim and ending on 31 January 2021 and made at least one payment to the employee in each of the three Bonus periods (see below) totalling at least £1,560 (gross)
- the employee must not be on notice of termination of employment with the employer on 31 January 2021. This includes a notice of retirement as well as employees who have resigned and are working out their notice periods.
Employers may also claim for employees of a previous business who have transferred to them if:
- TUPE applied;
- the PAYE succession rules applied;
- the employees were associated with the transfer of a business from a liquidator of a company in compulsory liquidation where TUPE would have applied had the company not been in compulsory liquidation.
However, in order to claim the bonus for these employees, the employees must meet all the eligibility criteria and the employer must have furloughed them and successfully claimed for them, under the CJRS, as their new employer. This means employers will not be able to claim the Bonus for any employees who transferred to them after the CJRS ends on 31 October 2020.
The minimum income threshold
As stated above, the employer must have made at least one payment to the employee in each of the three bonus periods totalling at least £1,560. HMRC confirms it will check that the employees have been paid at least the minimum income threshold through Full Payment Submissions via Real Time Information (RTI).
The bonus periods are:
- 6 November 2020 and ending on 5 December 2020
- 6 December 2020 and ending on 5 January 2021
- 6 January 2021 and ending on 5 February 2021
The minimum income threshold of £1,560 applies regardless of:
- how often employees are paid, and
- any circumstances that may have reduced the employee’s taxable pay in the relevant periods, such as being on statutory leave or unpaid leave or the level of relevant pension deductions that have been made.
How much can be claimed?
An employer may claim a one-off taxable payment of £1,000 in respect of each qualifying employee irrespective of their actual wages. Any bonus received will need to be included as income when calculating taxable profits for Income and Corporation Tax purposes.
When can a claim for the bonus be made?
Employers are able to claim the bonus from 15 February 2021 until 31 March 2021. No further claims for the bonus will be accepted after that date.
How to make a claim?
HMRC intends to publish details on how to access the online claim service on GOV.UK by the end of January 2021. Before employers can make a claim, they need to have reported all payments made to a qualifying employee between 6 November 2020 and 5 February 2021 to HMRC through Full Payment Submissions via RTI.
A claim for a bonus cannot be submitted until 15 February 2021, but in the meantime employers should ensure that they comply with the PAYE requirements on time and keep their payroll up to date. Any mistakes in relation to CJRS grants must also be notified to HMRC by 20 October 2020.
For advice and guidance on the bonus scheme please get in contact with the team today. Call Sean McDonough on 01225 750000 or email email@example.com.