The Job Retention Bonus: A Quick Guide
Guidance around the government’s Job Retention Bonus has been updated. We take a look at the details.
Don’t let your clients miss out
Back in July, Chancellor Rishi Sunak announced the Job Retention Bonus to encourage businesses in retaining staff who were previously furloughed. It means that employers can receive £1,000 for every employee they keep on until at least the end of January, however new guidance has been released which accountants should be aware of. Here we’ve summarised the key points, but in-depth details can be found on the Gov website.
Which employers can claim the Job Retention Bonus?
Any company that was originally eligible for the Coronavirus Job Retention Scheme will be able to receive the Job Retention Bonus. This is as long as:
- They’ve maintained enrolment for PAYE online
- They have a UK business bank account
- They’ve paid and filed their PAYE obligations on time and accurately under the Real Time Information (RTI) reporting system for every employee
A word of caution
If HMRC believes there are any discrepancies in a claim for the Job Retention Bonus then it may withhold payment, or ask for a payment back with penalties. This is why it’s essential to get it right first time.
What is the criteria for employees?
Employers will be able to claim for employees who:
- Were furloughed and therefore had their wages covered at least partially by the Coronavirus Job Retention Scheme
- Were employed continuously by your client’s company at the time the claim was made, and who are still employed by them on the 31st January 2021
- Have been paid the Minimum Income Threshold. That is to say, they must have been paid at least £520 a month on average between 1st November 2020 and 31st January 2021 (a minimum of £1,560 across the three months)
- Are not working a notice period for the employer making the claim which started prior to the 1st February 2021
- Have up-to-date RTI records for the period up to 31st January
Employers can receive the Job Retention Bonus for all employees who meet the criteria laid out above, regardless of their job title. Furloughed company directors are also eligible to claim.
Note that the Minimum Income Threshold will apply regardless of how often staff are paid, or whether there has been any unpaid or statutory leave.
What about employees who have returned from statutory parental leave?
This depends largely on when the employee returned from the leave. If they were on parental leave for any period this year but returned to work on the 10th June 2020 or later - and they were furloughed at some point - then the Job Retention Bonus will be applicable.
Employees who are on fixed term contracts
As long as an employee is either on a fixed term or ongoing contract of some kind, then the employer should be able to claim the bonus in respect of this as long as all other criteria are met. Extensions and renewals can also be made to contracts, as long as the staff member is employed continuously.
How much will employers be able to claim?
Offered as a single, one-off payment, the Job Retention Bonus will be worth £1,000 to the employer in respect of each eligible employee. So if one employee attracts the award, the employer will receive £1000, two employees £2000 and so on. The bonus is set to be taxable, which will need to be taken into account when determining income and taxable profits in relation to Self-Assessment or Corporation Tax.
How can employers get their hands on the Job Retention Bonus?
This is a handy post-Christmas bonus for many employers and for SMEs it could be essential in keeping their heads above water. Therefore, we recommend reminding your clients that they could well be eligible, and how they can apply.
Employers are not able to claim the bonus until the 15th February 2021. Further updates will be made to the guidance by the end of January, including details on how to access the online claim service.
Discuss R&D Tax Credits with your clients too
If your clients have taken on any innovative projects recently that necessitated some form of scientific or technological research then now is the time to make them aware of R&D Tax Credits.
What it’s all about
The R&D Tax Credits scheme is offered by the government to help cover the costs of innovative research and development activities. Any UK company can be eligible, regardless of industry, profitability, turnover or size.
If the company is profitable, then the relief is offered as a reduction in Corporation Tax. Loss-making companies can receive it as a cash lump sum instead.
The scheme is highly lucrative too. Even the smallest of claims can add up to thousands of pounds of much-needed extra funding that can be spent on anything your client sees fit (or reinvested into further R&D).
SMEs can receive as much as £33 for every £100 spent on R&D works, as long as a technological or scientific advancement has been made. So this could be the creation of a brand new product, process or service, or the improvement of an existing one. A massive range of costs can be covered too, including materials, overheads, staff and contractor costs and much more.
Remind you of one of your clients? See our R&D Tax Credits page for further details, plus you may find our recent blog 5 Steps In Making A Successful Claim For R&D Tax Credits worth a read as well.
Let us help you to help your clients
Myriad Associates is a specialist, UK-based R&D tax and funding consultancy providing the most comprehensive, accurate R&D advice in the business. And, once a client is in the position to begin their claim, our Tax Cloud portal for accountants will lead you through the claims process in a fully supported way that will achieve their all-important R&D Tax Credit award.
If you wish to find out how our team of R&D experts can work alongside you in providing the very best all-round R&D tax service to your clients, please do speak to us today on 0207 360 4437 or send us a message. We’ll be pleased to have you on board.