The government has shared further guidance relating to the Job Retention Bonus Scheme. The Job Retention Scheme (JRS) Bonus is a £1,000 one-off fixed payment for keeping workers in employment. To qualify, employers must keep staff in employment until the end of January 2021.
Any claims for the £1,000 bonus must be made between 15 February 2021 and 31 March 2021. Employers will be able to claim a single amount of £1,000 for each eligible employee, agency worker or officeholder.
The format of this scheme differs from the Coronavirus Job Retention Scheme (CJRS). The CJRS operated on a 'pay now, check later' basis, to ensure businesses had enough cash flow to pay salaries. But for the Job Retention Scheme Bonus, the government is moving to a 'check first, pay later' model.
If you have a CJRS claim that is still under HMRC investigation, this can delay JRS bonus payments
Who is eligible?
Employers can claim the bonus for an employee if they meet all the below criteria:
The employee was included in a claim under the CJRS
The employee remains continuously employed until 31 January 2021
The employee has received taxable pay in each of the three tax months: > 6th November 2020 – 5th December 2020 > 6th December 2020 – 5th January 2021 > 6th January 2021 – 5th February 20201
The employee received at least £1,560 as taxable pay across those three tax months. Note: any tax-free allowance or adjustment as driven by their tax code is not deducted/added to the taxable pay
The full payment submission for each of those three months has been submitted to HMRC on time and is accurate
By this logic, an employee who is paid £2,000 in November and December, but is not offered work in January would not be eligible for the bonus.
Although that employee meets the minimum income threshold, as they had not received a payment in each tax month, they would not qualify.
Who is not eligible?
An employee is no longer eligible for the bonus scheme if:
The employer has repaid all CJRS grant claimed in respect of that specific employee
The employee is not paid at least once in each of the three tax month periods
Their total taxable pay does not reach £1,560 across the three months
A leaving date has been reported on or before 31 January 2021.
The employee is placed on contractual or statutory notice of termination of their employment at any point before 31 January 2021
The contractual notice of termination of employment applies to all reasons for leaving. This includes retirement; not just redundancy.
It follows that it would be an abuse of the scheme to delay reporting a leaving date, and this could be validated by RTI data.
Minimum income threshold
There are some particular points to note about the minimum income threshold of £1,560:
The threshold relates to total taxable pay in a tax month regardless of how many times the employee is paid in the tax month.
Periods of family-related or sick leave do not lead to any reduction in the minimum income threshold.
Employers who are payrolling benefits in kind will have a higher gross taxable pay figure. This is becuase 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 pay.
Compliance and preparation
In preparation for making a claim, HMRC requires the employer to file all their RTI returns. These must be filed (accurately) on or before the contractual payment date for the whole of the 2020/21 tax year.
It is not clear whether, if the employer has used the three-day late reporting easement or has a first late reporting default, this would invalidate the employer from using the bonus scheme.
HMRC asks that the employer use the ‘irregular payment pattern indicator’ in the full payment submission (FPS) if the employee is not paid regularly.
Any requests for information from HMRC in respect to CJRS claims must be dealt with promptly as these can delay payment of the bonus or lead to a claim being rejected.
Agents who are authorised for PAYE online can make claims on behalf of clients.
The bonus is taxable income for both corporation tax and income tax purposes. However, where it is payable to an individual who is 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.