• Date

    06 Aug 2020
  • Category

    Tax

UK Government Job Retention Bonus Scheme

HMRC have this week released initial guidance on eligibility for the UK Government’s new “Job Retention Bonus” and the process to claim. The scheme provides employers with payment of £1,000 for each furloughed employee who is retained following the cessation of the Government’s Coronavirus Job Retention Scheme (“CJRS”) on 31st October 2020. Further detailed guidance is expected to be released by the end of September 2020.

The job retention bonus

The Job Retention Bonus (“the Bonus”) is a one-off payment to employers of £1,000 for every employee who they previously furloughed and claimed for under the scheme, and who remains continuously employed through to the end of January 2021.

The Bonus payments will be taxable in the hands of the employer and therefore will required to be reported on the self-assessment tax return (for sole traders/partnerships) or corporate tax return (for companies).

Employer eligibility

All employers are eligible for the scheme including recruitment agencies and umbrella companies.

In addition, HMRC have advised that a “new” employer may be able to claim in respect of an employee in the following circumstances:

  • Where the employee has transferred to the new employer under the Transfer of Undertakings (Protection of Employment) (TUPE) regulations or PAYE business succession rules.
  • Where the employee has transferred to the new employer as a result of a transfer of a business from the liquidator of a company in compulsory liquidation where TUPE would have applied were it not for the company being in compulsory liquidation.

To claim the Job Retention Bonus under these circumstances the transferred employees must have been furloughed by the new employer and a successful CJRS claim made. An employer will not be eligible to claim the Bonus for any employee transferred under TUPE or under the business succession rules after 31 October 2020.

HMRC will only accept claims where employers have complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees.

In addition, it is a requirement that all CJRS claims have been accurately completed as HMRC will withhold payment of the Bonus where it believes CJRS claims may have been fraudulently claimed or inflated. The Bonus will only be paid once any enquiries HMRC wishes to make have been completed. The employer must therefore have kept accurate records of claims made and be able to produce these on request.

Employee eligibility

Employers can claim the Job Retention Bonus for all employees who meet the below criteria, including office holders, company directors and agency workers.

The employee must:

  • Have been placed on furlough leave and have had a valid CJRS claim submitted for them.
  • Have been continuously employed by the relevant employer from the time of the employer’s most recent CJRS claim for that employee until at least 31 January 2021.
  • Have been paid an average of at least £520 per month between 1 November 2020 and 31 January 2021, receiving at least some earnings in each of the three months. Only earnings recorded through HMRCs RTI records can count towards the £520 per month average minimum earnings threshold.
  • Have up-to-date RTI records for the period to the end of January.
  • Not be serving a notice period for the employer making the claim, starting before 1st February 2021.

If an employee was engaged on a fixed term contract and was claimed for under the CJRS, the Bonus can be claimed by the employer where a new or extended contract is issued to ensure continuous employment for the required period.

HMRC have also confirmed that where employees have been on statutory parental leave, returned after 10 June 2020 and were claimed for under the CJRS then the employer will be able to claim the Bonus in respect of those employee provided the other eligibility criteria are met. The same treatment will apply to those employees who have returned having served as a mobilised military reservist.

Process for claiming the job retention bonus

Employers will be able to claim the Bonus via www.gov.uk after they have filed PAYE for January for January 2021 and payments will be made to employers from February 2021. Further guidance on the process will be provided in HMRC’s next update.

Employer actions in advance of claiming

  1. Continue to ensure that their employee records are up-to-date, including accurately reporting their employee’s details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system.
  2. Review CJRS claims to ensure these have been accurately submitted and any necessary amendments have been notified to HMRC.
  3. Monitor CJRS claims for the coming months ensuring that claims accurately reflect the changes to government/employer contribution levels.

Whilst further detail is awaited this is helpful initial information. We will of course provide further updates as more information becomes available. In the meantime, we are here to help and support you and please do speak to Dave Hedges, Head of Employment Tax.

About the author

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Dave Hedges

Partner Southampton
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