COVID-19: The CJRS & Job Retention Bonus final pieces

As the Coronavirus Job Retention Scheme (CJRS) draws to a close on 31 October 2020, we now have the outstanding detail on the cut off for claims to be submitted in relation to the CJRS and the "who, what and when" for claiming the CJRS Job Retention Bonus (JRB).

The October Treasury Direction

On 2 October 2020, HM Treasury published a new Schedule to the Coronavirus Act 2020 Functions of HMRC (Coronavirus Job Retention Scheme) Direction (the October Treasury Direction).

CJRS claim submission cut-off

Part one of the October Treasury Direction simply confirms that 30 November 2020 is the last day an employer can submit claims for a CJRS grant. After this date employers will not be able to submit any further claims or add to existing claims.

Job Retention Bonus ('JRB')

To encourage employers to retain furloughed employees after the CJRS closes, back in July the Chancellor announced the JRB under which employers can claim a £1,000 payment for every employee previously claimed for, non-fraudulently, under the CJRS who, subject to minimum earnings thresholds, remains continuously employed until 31 January 2021 and not serving a contractual or statutory notice period starting before 1 February 2021.

The £1,000 payment for each eligible employee is a bonus to the employer. The employer does not have to pass it over to the employee.

Part two, of the October Treasury Direction now sets out the "who, what and when" for employers to claim the JRB. In addition HMRC guidance has also been published providing details of the JRB requirements: check if you can claim the Job Retention Bonus from 15 February 2021.

'The Who'

Who can claim?

An employer is a 'qualifying employer' if at the time of making the JRB claim the employer has:

1. a PAYE scheme registered on HMRC's real time information system (RTI);
2. made a CJRS claim in respect of the employee; and
3. delivered the required information^[1] to HMRC.

In essence, an employer who has furloughed employees and made an eligible claim for those furloughed employees through the CJRS, can claim the bonus.

Employers utilising the Job Support Scheme (JSS) from November 2020, can still claim the JRB in respect of employees furloughed under the CJRS, see our insight The New COVID-19 Job Support Scheme Q&A: the essentials for employers and employees for more on the JSS.

Who can be claimed for?

Employers can claim for employees that:

1. they made an eligible claim for under the CJRS;
2. have been continuously employed from the end of the claim period covered by the CJRS claim  in relation to the employee until 31 January 2021;
3. are not serving a contractual or statutory notice period on 31 January 2021 (this includes people serving notice of retirement); and
4. meet the minimum income threshold and have been paid in each of the JRB relevant tax months (see below).

If the employer repaid all the grant amounts claimed for any furloughed employee(s) for any reason, the employer cannot claim the bonus for that employee(s) as they have not been paid using the CJRS grant.

An employer may be able to claim the JRB in relation to employees who have been transferred under TUPE or due to a change in ownership where the PAYE business succession rules apply. For transferred in employees who meet the JRB eligibility criteria, a claim can only be made by an employer who has themselves furloughed and successfully claimed for the transferred employees under the CJRS, as their new employer. This means that employers will not be able to claim the JRB for any employees who transferred after the CJRS closes on 31 October 2020.

Individuals who are not employees, such as office holders or agency workers, can also be claimed for as long as the employer claimed a grant for them under the CJRS and the other JRB eligibility criteria are met.

'The What'

What is the minimum income threshold?

To be eligible to claim a JRB in relation to an employee, the employee must have been paid at least the minimum income threshold being a total of at least £1,560 (gross) taxable pay during the tax months:

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

with at least one payment of taxable earnings (of any amount) in each of the relevant tax months.

It is important to note that only payments recorded as taxable pay will count towards the minimum income threshold (note example B below).

The minimum income threshold criteria apply regardless of:

• The employer's usual pay cycles; or
• any circumstances that may have reduced the employee’s pay in the relevant tax periods, such as being on statutory leave or unpaid leave.

HMRC has published some helpful illustrative examples (Example of employer deciding which employees will meet the minimum income threshold for the Job Retention Bonus), which include:

1. Bob usually earns around £1,800 each month but was off sick and receiving Statutory Sick Pay (SSP) for several weeks, including the whole of December. His pay in the relevant tax periods was:
   • 6 November to 5 December 2020 - £1,500
   • 6 December 2020 to 5 January 2021 - £383.40
   • 6 January to 5 February 2021 - £1,750

   SSP counts as taxable earnings, so Bob received a payment of taxable earnings in each relevant tax period. The total taxable pay is £3,633.40. This exceeds the minimum income threshold of £1,560. The employer can claim the JRB in respect of Bob.

2. Charlotte works part time variable hours for £10 per hour, paid on the last day of each month. She is a member of the company pension scheme, making 5% contributions under a net pay arrangement (pension contributions collected before income tax). Charlotte was paid for 50 hours in November and 55 hours in December and January.
   
   The total gross pay was £1,600 across the relevant tax periods, however the effect of the pension deductions (£80 not taxable) mean that her pay in those periods was:
   • 6 November to 5 December 2020 - £475
   • 6 December 2020 to 5 January 2021 - £522.50
   • 6 January to 5 February 2021 - £522.50

   Charlotte received a payment of taxable earnings in each relevant tax period but the total taxable pay is £1,520. This is less than the £1,560 minimum income threshold so the employer cannot claim the JRB in respect of Charlotte.

3. Frans works full time, with a monthly salary of £4,000 paid on the last day of each month, he takes a month of unpaid leave every December to visit family overseas. His pay in the relevant tax periods was:
   • 6 November to 5 December 2020 - £4,000
   • 6 December 2020 to 5 January 2021- £0
   • 6 January to 5 February 2021 - £4,000

   Frans did not receive a payment of taxable earnings in each of the relevant tax periods even though the total taxable pay is £8,000 and exceeds the minimum income threshold of £1,560, the employer cannot claim the JRB in respect of Frans.

'The When'

JRB claims can only be submitted during a six week period beginning 15 February 2021 and ending 31 March 2021.

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

In preparation for making claims employer should:

• still be enrolled for PAYE online;
• comply with PAYE obligations to file PAYE accurately and on time under RTI reporting for all employees between 6 April 2020 and 5 February 2021;
• report the leaving date for any employees that stop working before the end of the pay period that they leave in;
• use the irregular payment pattern indicator in RTI for any employees not being paid regularly; and
• comply with all requests from HMRC to provide any employee data for past CJRS claims.

The tax treatment

As for the tax treatment of the JRB, the HMRC guidance states:

• JRB grants received must be included when calculating taxable profits with businesses able to 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 JRB grants received under the scheme.

Timeline

31 October 2020

• CJRS closes.

1 November 2020

• JSS opens

30 November 2020

• Last date for submitting a CJRS claim

31 January 2021

• End date for JRB "continuously employed to" requirement

15 February 2021

• JRB claim period opens

31 March 2021

• JRB claim period closes

30 April 2021

• JSS closes

Footnote

[1] The required information is that specified in paragraphs 2 to 46 of Schedule A1 to the Income Tax (Pay As You Earn) Regulations 2003 for the period 6 April 2020 to 5 February 2021.