Coronavirus Job Retention Bonus: what you need to know

Michael McAllister

Michael McAllister

Partner & Head of Payroll Services

The Chancellor announced the introduction of the Coronavirus Job Retention Bonus last month, in a step to reduce the number of people being made redundant as the furlough scheme unwinds. The bonus rewards employers who successfully bring back employers after being furloughed.

More guidance around the bonus has now been released and I’ve summarised the key points you need to know in this short blog.

What is the Job Retention Bonus?

The Government is awarding £1,000 to UK employers for every eligible furloughed employee who remains continuously employed until the end of January 2021.

Is it taxable?

Yes, it’s been confirmed recently that the bonus will be taxable so a business must include the whole amount as income when calculating Corporation Tax or Self-Assessment.

Eligibility for the bonus

There are conditions attached to this as you would expect, and these are:

  • The employee remains continuously employed to the end of January 2021; and
  • The employees must earn above the Lower Earnings Limit for National Insurance purposes i.e. £520 per month on average between the end of the CJRS and the end of January 2021

And of course, there are also some exceptions to note too:

  • An employer will be able to claim a bonus for any employee that was eligible for the Coronavirus Job Retention Scheme and claimed a grant for under the scheme. However, a bonus cannot be claimed for any employee that was incorrectly claimed for under the scheme. This comes after it was revealed a number of employers were making fraudulent claims.
  • The bonus is also not available for any employees starting a contractual or notice period before 1 February 2021.

How do I claim the bonus and when will it be paid?

Payments will be made from February 2021. Full details of how to make a claim and the deadline for applying have not yet been released. However, in the meantime our advice stays the same. Ensure you keep comprehensive payroll records and notes for all employees that have been claimed for under the furlough scheme, failure to provide an accurate record to HMRC could jeopardise your claim.

Get in touch

If you’d like to discuss this further in the meantime, please feel free to get in touch with me or your usual Johnston Carmichael adviser.