Covid-19: guidance on furlough job retention bonus

HMRC has published guidance on how businesses can claim the government’s £1,000 job retention bonus, available to employers who keep furloughed workers on the payroll for the next three months

The bonus is a £1,000 one-off taxable payment to the employer, for each eligible employee that was furloughed and kept continuously employed until 31 January 2021.

Employers will still be able to claim under the scheme, set to cost the Treasury £9bn, even if they are also receiving support from the recently announced job support scheme which will launch on 1 November.

The bonus is available to any employer who has furloughed employees and made an eligible claim for them through the coronavirus job retention scheme (CJRS).

The employee must have been eligible for the CRJS grant for the employer to be eligible for the bonus, and it is not payable to any employer who repaid a CJRS grant.

The guidance details the arrangements for employees who have been transferred from another employer, and those who are not employees but classified as office holders or agency workers.

There is a minimum income threshold the employer must pay the employee.

This is 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; and 6 January to 5 February 2021.

Before employers can claim the bonus, they will to need to have reported all payments made to employees between 6 November 2020 and 5 February 2021 to HMRC through full payment submissions via real time information (RTI).

Businesses must include payments they receive under the scheme as income when calculating their taxable profits for income tax and corporation tax purposes, but can deduct employment costs as normal.

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 scheme will not open for claims until 15 February 2021, and employers will have until 31 March 2021 to make a claim after which the scheme will close. No further claims will be accepted after this date.

The guidance will be updated by the end of January 2021 with details on how to access the online claim service.

Rishi Sunak, Chancellor of the Exchequer, said: ‘The job retention bonus is an additional boost employers can receive on top of the extensive support we’ve already put in place for businesses, including loans, grants and our new job support scheme.

‘I know how hard employers have worked to bring furloughed staff back, and this bonus, equal to a 20% wage subsidy, will help ensure they continue to retain them.’

The bonus guidance is being published ahead of the launch of the new job support scheme, announced as part of Sunak’s winter economy plan.

This will run for six months and will see the government contribute towards the wages of employees who are working fewer than normal hours due to decreased demand. The scheme will be open to employers across the UK even if they have not previously used the furlough scheme.

Guidance on its operation is due out shortly.

Check if you can claim the job retention bonus here