In July, the Government announced a new job retention bonus (JRB) where they will pay employers a one-off £1,000 bonus for each eligible employee that had been furloughed and then retained in employment until 31 January 2021.
Further guidance on the JRB has now been published and we have summarised the key points below.
To qualify, the following requirements must be met:
- the previously furloughed employee must be continuously employed by the business until at least 31 January 2021;
- the employee must meet the minimum income threshold to qualify (see section below);
- RTI records must be up to date to the 5 February 2021; and
- the employee must not be serving a statutory or contractual notice period which started prior to 1 February 2021.
The guidance confirms that it will be possible to claim for all employees that meet these criteria, including directors and agency workers, provided the above eligibility criteria is also met.
Minimum income threshold
One of the eligibility criteria to satisfy is that employees must be paid at least the minimum income threshold.
To meet this threshold, the employee must have received taxable pay totalling at least £1,560 during the period 6 November 2020 and 5 February 2021. This would include any earnings received under the job support scheme.
The employee must also receive some taxable earnings in each of the following periods:
- 6 November 2020 to 5 December 2020
- 6 December 2020 to 5 January 2021
- 6 January 2021 to 5 February 2021
For example, if an employee received taxable earnings of £1,000, £0 and £800 in each of the respective periods above, they would not qualify for the JRB. Although the employee would have met the minimum income threshold of £1,560, they would not have received taxable earnings in each of the three relevant periods. There is currently no minimum payment that needs to be met in any given month, providing some taxable earnings are received.
HMRC has published some worked examples for common scenarios on meeting the threshold here.
Claiming the bonus
The bonus can be claimed between 15 February 2021 and 31 March 2021 via an online service.
All payments made to eligible employees for the period 6 November 2020 to 5 February 2021 will need to have been reported to HMRC prior to making a claim.
Further information is expected in January 2021 in respect of how to access the online service. The guidance does confirm that agents will be able to claim the bonus on an employer’s behalf.
The guidance confirms that the bonus will be treated as taxable income when calculating profits under income tax or corporation tax.
Please note that these rules are based on the guidance as issued on 2 October 2020 and may be subject to change.
If you would like support with any of your employment taxes, please get in touch with Katie Williams at firstname.lastname@example.org or 01242 237661.