COVID-19: Further details on Job Retention Bonus

• Government has published a policy paper today (31 July 2020) giving employers further details on the eligibility requirements of, and how they can claim, the Job Retention Bonus (“JRB”).
• The JRB is taxable and so, the whole amount must be included as income when calculating taxable profits for Corporation Tax or Self-Assessment.
• From February 2021, all employers will be eligible for the JRB, including recruitment agencies and umbrella companies if they meet certain criteria.
• Employers will receive a one-off payment of £1,000 for every employee which an employer made a claim for under the Coronavirus Job Retention Scheme (“CJRS”), if they remain continuously employed from the time of the employer’s most recent claim under the CJRS until 31 January 2021.
• Employees must have been paid on average at least £520 per month between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the three months). The employee does not have to be paid £520 in each month, but have received some earnings in each of the three calendar months that have been paid and reported to HMRC via Real Time Information (“RTI”).
• Employers must hold up to date RTI records for the period to the end of January 2021.
• Employers will not be able to make a claim for the JRB if an employee is serving a contractual or statutory notice period that started before 1 February 2021.
• Employees who meet the above criteria can include office holders, company directors and agency workers, including those employed by umbrella companies.
• Employees who were on statutory parental leave or mobilised as a military reservists who were “furloughed” and claims made under the CJRS after10 June 2020, when the CJRS closed to new entrants will also be eligible for the bonus as long as they meet the other eligibility criteria.
• Employers will also be eligible to claim the JRB in respect of employees of a previous business where the transfers were made under Transfer of Undertakings (Protected Employment) regulations (“TUPE”) or where the PAYE business succession rules apply to the change in ownership, provided they have been furloughed and a claim made successfully under the CJRS by the new employer.
• Employers should ensure that;
  • Employee records are up to date including accurately reporting their employee’s details and wages on the Full Payment Submission (“FPS”) through RTI
  • All claims made through the CJRS have been accurately submitted and any necessary amendments have been notified to HMRC
  • Have complied with their obligations to pay and file PAYE accurately and on time under the RTI reporting system for all employees
  • Enrolment for PAYE online is maintained
  • They have a UK bank account
• Detailed guidance will be published in September 2020.

See the policy paper here.

Aspire Comment

The JRB is an example of the steps Government are willing to take to support business in retaining employees through what has been deemed “the worst contraction of the UK economy in over forty years”. However, many are failing to see how the JRB (£1,000 per retained employee) will be a big enough incentive for those businesses that have been severely affected by the pandemic.

The JRB makes slight mockery of the redundancy decisions businesses may have to make as it will not have been easy for many businesses to let go of staff and, in most cases, the cost of retaining employees until 31 January 2021 far outweighs the bonus being offered by the Government. 

Nevertheless, this is a measure that will offer much needed support to smaller businesses who successfully weather the COVID-19 storm  and avoid having to make redundancies.

It is essential now that businesses take the time to review the records and calculations for each claim made under the CJRS to ensure that each claim has been accurately made and was valid.  Claiming the JRB in February 2021 will be another compliance aspect for HMRC to inspect.

If you require any further guidance, aid with redundancies or help with any other employment tax matters, please get in touch with one of our advisors on 0121 445 6178 or email enquire@aspirepartnership.co.uk.