An introduction to the Job Retention Bonus

The Chancellor of the Exchequer, Rishi Sunak, announced his ‘Plan for Jobs’ on 8 July in parliament. In it, he outlined how the government will support the UK’s economic recovery while continuing to prioritise people’s health. As part of this, the government is introducing a new Job Retention Bonus to provide additional support to employers who keep their furloughed employees on, in meaningful employment, after the Coronavirus Job Retention Scheme (CJRS) ends on 31 October 2020.

On Friday 31 July, HMRC published more information on the Job Retention Bonus. Further details will be published in September, but here is what we know so far about the scheme.

What is the Job Retention Bonus?

The Job Retention Bonus (JRB) is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the CJRS, and who remains continuously employed up until 31 January 2021, earning at least £520 a month on average between 1 November 2020 and 31 January 2021.

Which employers are eligible to apply?

All types of employers are eligible to claim the JRB including recruitment agencies and umbrella companies.

To be eligible, the employer must have:

• made a correct claim under the CJRS for the employee. It will not be payable if the claim was incorrect. If HMRC believes there is a risk that the employer’s claims may have been fraudulently made or inflated, payment of JRB will be withheld pending the conclusion of their investigation.
• complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees.
• maintained enrolment for PAYE online.
• a UK bank account.

Remember…

Employers must keep their payroll up to date and accurate.  They must also address any requests for further information from HMRC regarding their CJRS claims.

Which employees can they claim for?

To be eligible, the employee must have been:

• furloughed and had a valid CJRS claim submitted for them.
• continuously employed by the relevant employer from the time of the employer’s most recent claim for that employee until at least 31 January 2021.
• paid an average of at least £520 a month between 1 November 2020 and 31 January 2021). The guidance states that the employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months and must receive at least £1,560 across the 3 months.
• have up to date RTI records for the period to the end of January.
• must not be serving a contractual or statutory notice period, that started before 1 February 2021.

Important!

It’s clear from this that if notice of termination is served before the 1 February 2021, a claim for the JRB can’t be made for that employee.

You can make a claim for all employees who meet these criteria, including office holders, company directors and agency workers (including those employed by umbrella companies).

The rules apply regardless of the frequency of the employee’s pay periods, the hours worked and rate of pay.

What’s included in calculating the £520?

We’re expecting detailed rules on this to be published in September.

The current guidance states that only earnings recorded through HMRC Real Time Information (RTI) records can count towards this.

Fixed term contracts

Fixed term contracts can be extended or renewed without affecting eligibility for the bonus, provided that continuous employment is maintained.

When can a claim be made?

Employers will be able to claim the JRB after they have filed PAYE for January. HMRC will publish more details on the process in September.

When will it be paid?

Payment will be made to employers from February 2021.

Is the bonus taxable?

Yes, employers must include the whole amount as income when calculating their taxable profits for Corporation Tax or Self-Assessment.

What should employers do now if they want to claim?

Employers must make sure their employee records are up to date and accurately reported through the RTI system.

They should also ensure their CJRS claims are correct and, where necessary, you’ve notified HMRC of any changes.

How can Citation help?

Thanks to our many years of working with businesses across the country – especially during this unprecedented time – we know that making sure you leave no stone unturned is one of the most important steps to reopening your doors safely and compliantly from day one.

Getting people back through your doors and feeling safe when the time comes is the key to getting out of COVID-19 in the strongest possible position. But you don’t have to do that alone.

When you partner with us, our team of experts become an extended part of your team. So, we’re on hand to make sure that you’ve got access to all the information, tools and templates you need to keep you compliant from day one.

If you’re ready to start planning your return to business and you want the help, guidance and advice of our expert team, you can call us on 0345 844 1111 for a chat about what you need and to get the ball rolling or you can drop us a line here.