The Job Retention Bonus, worth up to £9 billion, will support millions of employers who have kept on furloughed workers.

The new scheme is designed to continue to support jobs through the UK’s economic recovery from coronavirus by encouraging and helping employers to retain as many employees who’ve been on furlough as possible.

Employers who have furloughed employees will be able to claim the bonus from 15 February until 31 March 2021.

Employers will be able to claim the bonus if they have furloughed employees and made an eligible claim for them through the Coronavirus Job Retention Scheme (CJRS). Each employee must have been eligible for the Coronavirus Job Retention Scheme grant for the employer to be eligible for the bonus.

Employers will still be able to claim even if they are receiving support from the recently announced Job Support Scheme (JSS), which will protect jobs in businesses facing lower demand over the winter months due to coronavirus. As we wrote earlier, the expanded JSS will now also cover firms required to close due to Covid restrictions. The scheme will be open to employers across the UK even if they have not previously used the furlough scheme.

Employers can claim the bonus for employees that:

• they made an eligible claim for under the Coronavirus Job Retention Scheme
• they kept continuously employed from the end of the claim period of the last Coronavirus Job Retention Scheme claim for them, until 31 January 2021
• are not serving a contractual or statutory notice period for the employer on 31 January 2021 (this includes people serving notice of retirement)
• they paid enough an amount in each relevant tax month and enough to meet the Job Retention Bonus minimum income threshold

To meet the minimum income threshold the employer must pay their employee a total of at least £1,560 (gross) throughout the tax months:

• 6 November to 5 December 2020
• 6 December 2020 to 5 January 2021
• 6 January to 5 February 2021

The employer must pay their employee at least one payment of taxable earnings (of any amount) in each of the relevant tax months. Only payments recorded as taxable pay will count towards the minimum income threshold. Taxable pay is reported to HMRC as a single figure through Full Payment Submissions via Real Time Information (RTI).

HMRC will not pay the bonus if an employer has made an incorrect Coronavirus Job Retention Scheme claim and their employee was not eligible for the Coronavirus Job Retention Scheme.

The £1,000 Job Retention Bonus is equal to a 20% wage subsidy for the employment costs of the average person previously furloughed, but for those on lower incomes, it’s 40% of wage costs over the three-month period to the end of January 2021.

The payments received under the scheme must be treated as income when one calculates their 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.

The bonus is an additional boost employers can receive on top of the extensive support the government has already put in place for businesses, including loans, grants and the new Job Support Scheme.

Check if you can claim the Job Retention Bonus from 15 February 2021 here.

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