On 8 July 2020, the Chancellor, Rishi Sunak, announced the Job Retention Bonus Scheme as part of the Government’s ‘Plan for Jobs’ aimed at incentivising employers to protect jobs and support the UK’s recovery in the wake of Covid-19.
Further details were recently released by the Government providing more information about how the Job Retention Bonus will work. For ease, we have summarised the key points below.
What is the Job Retention Bonus (JRB)?
It is a one-off payment aimed at encouraging employers to retain staff in meaningful employment beyond the end of the Coronavirus Job Retention Scheme (CJRS) which is due to end on 31 October 2020.
Under the JRB, businesses will be awarded a £1,000 taxable bonus for every individual who was furloughed and who remains in employment until the end of January 2021.
When can businesses claim the JRB?
Employers will be able to claim the bonus between 15 February 2021 and 31 March 2021. Employers can decide what to use the money for. It does not have to be paid to the employees.
Which employers are eligible for the JRB?
An employer will be able to claim the JRB for any employees who were legitimately furloughed under the CJRS and who remain employed as of 31 January 2021.
Employers should ensure that they have:
- Complied with the obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system.
- Maintained enrolment for PAYE online.
- A UK bank account.
Qualifying employers are entitled to claim both the JRB and the Job Support Scheme (for more information click here.)
It is essential for employers to keep accurate and up to date records as failure to provide HMRC with the required employee data, can lead to claims for the JRB being rejected or delayed.
An employer may be eligible to claim the JRB in respect of employees who transferred to the business under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), or if the PAYE business succession rules apply to the change in ownership.
To claim the JRB under these circumstances the transferred employees must have been furloughed in accordance with the CJRS and their new employer (i.e. the one that they transferred to), must have been successfully reimbursed under the CJRS. An employer will not be eligible for the JRB in respect of any employee transferred under TUPE or under the business succession rules after 31 October 2020.
Which individuals can businesses claim the JRB for?
Employers can only claim for employees who were furloughed under the CJRS as long as they meet the below criteria.
To be eligible employees must also:
- Have been continuously employed by the employer from the time of the employer’s most recent CJRS claim for that employee until at least 31 January 2021.
- Have been paid the minimum income threshold throughout the relevant tax months. Only earnings recorded through HMRC RTI records can be counted towards the threshold.
- Have up to date RTI records for 1 November 2020 to 31 January 2021
- Employees must also not be serving a contractual or statutory notice period that started before 1 February 2021.
In addition, employers must have paid employees enough in each relevant tax month to meet the JRB minimum income threshold. This criteria applies regardless of how often you pay your employee or any circumstances that may have reduced their pay (e.g. statutory or unpaid leave).
To meet the minimum income threshold employees must have been paid a total of at least £1,560 (gross) throughout the tax months:
- 6 November to 5 December 2020
- 6 December 2020 to 5 January 2021
- 6 January to 5 February 2021
It is important to note that employers must pay employees at least one payment of taxable earnings, of any amount, in each of the above tax months.
Only payments recorded as taxable pay will count towards the income threshold. This is reported to HMRC as a single figure through Full Payment Submissions via Real Time Information (RTI).
If an employee returned from statutory leave after 10 June 2020 and was successfully claimed for under the CJRS scheme then they will be eligible for the JRB as long as they meet the other criteria.
Employees on a fixed-term contract will also be eligible. It is worth noting that contracts can still be extended or renewed without affecting eligibility for the bonus as long as continuous employment is maintained.
Can businesses claim the JRB for individuals who are not employees?
Yes, it is possible to claim the JRB for non-employees such as officeholders or agency workers as long as the business successfully claimed the CJRS for them and they meet the other JRB eligibility criteria.
Can the JRB be claimed if the business has repaid the CJRS grant to HMRC?
No. It is not possible to claim the bonus for any employees that have not paid using the CJRS grant. This applies regardless of the reason why the grant was repaid.
What if you intend on making some employees redundant?
If an employer intends to make redundancies, they must comply with the normal rules for redundancy (for more information click here.), which include using fair redundancy criteria. The JRB does not change the redundancy process.
How can employers claim the JRB?
Employers cannot claim the bonus until 15 February 2021.
Before claiming the bonus, employers must have reported all payments made to the employee between 6 November 2020 and 5 February 2021 to HMRC through Full Payment Submissions via Real Time Information (RTI).
To ensure claims can be processed in February 2021, businesses must:
- Be enrolled for PAYE online.
- Comply with PAYE obligations to file PAYE accurately and on time under RTI reporting for all employees between 6 April 2020 and 5 February 2021.
- Keep payroll up to date and report the leaving date of any employees that stop working before the end of the pay period that they leave in.
- Use the irregular payment pattern indicator in RTI for any employees not being paid regularly.
- Comply with all requests from HMRC to provide any employee data for past CJRS claims.
Where applicable, agents will be able to claim the JRB on behalf of their clients.
The Government guidance will be updated by the end of January 2021 to provide further information on how to access the online claim service.
How will the JRB be taxed?
JRB payments are classed as income for the purposes of calculating taxable profits for Income Tax and Corporation Tax purposes. Employment costs can be deducted as normal for the purpose of calculating taxable profits.
For those employees who are not part of a business (such as nannies or other domestic staff), tax will not be payable on grants received under the scheme.
If you would like further information on what the new schemes might mean for you, please contact Debbie Sadler on 01494 478 671 or at email@example.com.