COVID-19 update – 8 October – Job Retention Bonus

HMRC has published new guidance for employers on the eligibility requirements for claiming this Job Retention Bonus.

The Job Retention Bonus is a one-off taxable payment of £1,000 that can be made to employers, for each eligible employee, agency worker or office holder that they furloughed and kept continuously employed until 31 January 2021. The bonus can be claimed between 15 February 2021 and 31 March 2021.

HMRC guidance provides information on who can claim the bonus, employees for whom the bonus can be claimed, the minimum income threshold that must be paid to employees in order to be eligible for the bonus, and what employers need to do before making a claim. HMRC has also published a set of examples to help employers decide which employees will meet the minimum income threshold for the Job Retention Bonus. HMRC will update this guidance by the end of January 2021 with details on how to access the online claim service on GOV.UK.

HMRC will check claims to RTI data before paying out under the job support scheme (JSS) and the bonus scheme. Also where HMRC are investigating a claim under the coronavirus job retention scheme (CJRS), this can delay the payment of the bonus payment. The JSS replaces the CJRS from 1 November 2020. Employers can claim for the same employees under the JSS and can still receive the £1,000 bonus. HMRC will not pay the bonus if the employer made an incorrect CJRS claim and their employee was not eligible for the CJRS.

Which employees can I claim for?

An employer can claim for employees that:

• they made an eligible claim for under the Coronavirus Job Retention Scheme (CJRS)
• the employer has not repaid all the CJRS grant claimed in respect of that employee (regardless of the reason for the repayment)
• they kept continuously employed until 31 January 2021
• are not serving a contractual or statutory notice period on 31 January 2021 (this includes people serving notice of retirement)
• they received taxable earnings (of any amount) in each of the three relevant tax months below:

• • 6 November 2020 – 5 December 2020
  • 6 December 2020 – 5 January 2021
  • 6 January 2021 – 5 February 2021
• the total taxable earnings received from 6 November 2020 to 5 February 2021 is at least £1,560 gross (see notes on taxable earnings below)

If an employee was transferred under a TUPE arrangement to the employer’s payroll, that new employer must have made at least one CJRS claim for them before the CJRS scheme finishes on 31 October 2020.

Taxable earnings – points to note

• Taxable earnings are reduced by pension contributions made under net pay arrangements (ie where taxable income is reduced by the pension contribution before PAYE tax is calculated).
• It is assumed that charitable giving and share incentive plan contributions will reduce gross taxable earnings in the same way as net pay pension arrangements.
• Any tax free allowance or adjustment as driven by their tax code is not deducted/added to the taxable earnings.
• Employers who are payrolling benefits in kind will have a higher gross taxable earnings figure, as it will include the notional amount for the benefits in kind as well as their cash earnings. There is no indication in the guidance that HMRC requires payrolled benefits to be deducted from taxable earnings.

Getting ready to make a claim

Employers cannot claim the bonus until 15 February 2021. HMRC guidance will be updated by the end of January 2021 with details on how to access the online claim service on GOV.UK.

If we are authorised to do PAYE online for you, we will be able to claim the Job Retention Bonus on your behalf. Please get in touch if you would like assistance with this.

Before claiming the bonus, employers will to need to have reported to HMRC all payments made to their employees between 6 November 2020 and 5 February 2021 on the RTI Full Payment Submissions.

To ensure you are ready to claim you must:

• still be enrolled for PAYE online
• comply with your PAYE obligations to file PAYE accurately and on time under Real Time Information (RTI) reporting for all employees between 6 April 2020 and 5 February 2021
• keep your payroll up to date and make sure you report the leaving date for any employees that stop working for you before the end of the pay period that they leave in
• use the ‘irregular payment pattern indicator’ in Real Time Information (RTI) for any employees not being paid regularly
• comply with all requests from HMRC to provide any employee data for past Coronavirus Job Retention Scheme claims

Job retention bonus is taxable income

The bonus is taxable income for the employer, whether a company, partnership, or self-employed. However, where it is payable to an individual, who also happens to be an employer of a nanny or a member of domestic staff, the bonus is not classed as part of the individual’s taxable income for the year.