Further Guidance on Job Retention Bonus
Regarding the Job Retention Bonus, the government has announced further information on how businesses can claim the government’s Job Retention Bonus, with millions set to benefit from the £9 billion package. The Job Retention Bonus, worth up to £9 billion is set to support millions of employers who have kept on furloughed workers. The bonus will work alongside newly announced Job Support Scheme and could be worth more than 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021
What is the Job Retention Bonus?
The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the scheme, and who remains continuously employed through to 31 January 2021.
What is the Eligibilty Criteria?
To be eligible for the bonus you must make sure that your employees have been paid at least the minimum income threshold.
To meet the minimum income threshold, you must pay your employee a total of at least £1,560 (gross) throughout the following tax months:
- 6 November to 5 December 2020
- 6 December 2020 to 5 January 2021
- 6 January to 5 February 2021
You must pay your employee at least one payment of taxable earnings (of any amount) in each of the relevant tax months.
The minimum income threshold criteria apply regardless of:
- how often you pay your employees
- any circumstances that may have reduced your employee’s pay in the relevant tax periods, such as being on statutory leave or unpaid leave
HMRC will check that your employees have been paid at least the minimum income threshold by checking information you have submitted through Full Payment Submissions via Real Time Information (RTI).
What If you are making redundancies?
If you make redundancies, you must comply with the normal rules for redundancy, which include using fair redundancy criteria. These rules apply even if this means that fewer of your employees are eligible for the Job Retention Bonus.
When can I claim?
Businesses can claim the Bonus from 15 February until the end of March. Before you can claim the bonus, you will need to have reported all payments made to your employee between 6 November 2020 and 5 February 2021 to HMRC through Full Payment Submissions via Real Time Information (RTI).
What are the steps for making the claim?
- 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 indicatorin 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
What is the Tax Treatment for the Job Retention Bonus?
You must include payments you receive under the scheme as income when you calculate your taxable profits for Income Tax and Corporation Tax purposes.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) will not have to pay tax on grants received under the scheme.
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