Dive into the world of PAYE investigations. Uncover the facts, implications, and insights in this informative blog
The UK government released new guidance at the start of this month relating to the new Job Retention Bonus scheme.
Here, we round up some of the key points for employers based on the new guidance released, which is available in full here.
What is the Job Retention Bonus scheme?
The Job Retention Bonus scheme is designed to incentivise employers to keep their furloughed employees on payroll - a necessary step to avoid mass job losses due to the coronavirus pandemic’s effect on several UK industries.
The bonus is a one-off fixed payment of £1,000, paid directly to UK employers for each eligible furloughed employee that remains contracted until 31 January 2021. The bonus amount is taxable and remains the same for all eligible employees, irrespective of their usual earnings.
Who is eligible to receive the bonus?
Employers can claim the bonuses for employees that were furloughed under the Coronavirus Job Retention Scheme (CJRS), which is due to close at the end of October. The bonus of £1,000 is for each employee who meets the criteria, including office-holders, company directors and agency workers. The employer must have claimed for them under the CJRS.
Employees that are serving a contractual or statutory notice period that started before 1 February 2021 are not eligible for the bonus.
Employers are allowed to claim under the Job Retention Bonus scheme, in addition to utilising the government’s new Job Support Scheme.
Is there a minimum income threshold?
For an employer to be eligible to receive the bonus, they must have paid the “minimum income threshold” to the employee. This means the employee must have received payments of at least £1560 (before tax) between the period of 6 November 2020 and 5 February 2021.
The guidance further clarifies which tax months these fall into:
- 6 November to 5 December 2020
- 6 December 2020 to 5 January 2021
- 6 January to 5 February 2021
The employer must have paid the employee at least one month of taxable earnings in each of the three tax months listed above. Taxable earnings include any statutory sick pay payments.
When can employers claim?
The scheme opens for use between 15 February 2021 and 31 March 2021.
The government will provide further guidance relating to claiming at the start of the new year.
What about employees who have been transferred to you?
The guidance states that in TUPE (Transfer of Undertakings - Protection of Employment) circumstances, employers may be able to claim for employees that have transferred to them.
However, the employer must have previously received a grant for the worker under the CJRS, as their new employer.
This means that any employees that transfer to your business after the Coronavirus Job Retention Scheme closes will not be eligible under the new scheme.
How should employers prepare?
Before an employer can make a claim, they must report all payments made to the employee between 6 November 2020 and 5 February 2021 to HMRC through Real Time Information (RTI).
Employers should ensure that:
- they are utilising for PAYE’s online service;
- they comply with their PAYE obligations to file PAYE accurately under RTI reporting for all employees between 6 April 2020 and 5 February 2021;
- they keep their payroll up to date and accurately report the leaving date for any employees that stop working for them before the end of the pay period that they leave in;
- they use the irregular payment pattern indicator in RTI for any employees not being paid regularly; and;
- they comply with any requests from HMRC to provide employee data for Coronavirus Job Retention Scheme claims.
While the financial incentive on offer may not be enough for many small businesses facing extreme difficulties, it may provide some help for employers that are planning their next steps.