On 1 October 2020, the Treasury provided details of the “Coronavirus Job Retention Scheme (Job Retention) Bonus” (CJRS Bonus) in a new Direction. Eligible employers may claim a one-off taxable bonus of £1,000 in respect of each qualifying employee. The employer may retain the full amount of the net CJRS Bonus and is not obliged to share this with the relevant employee.
Purpose of the CJRS Bonus
The purpose of the CJRS Bonus is to incentivise employers to continue to employ those furloughed under the CJRS.
The Direction confirms that, “Integral to the purpose of CJRS is that the amounts paid to an employer … are used by the employer to continue the employment of employees whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.” It states very clearly that the purpose of the CJRS Bonus is “to enhance and consolidate the purpose of CJRS”, and that no claim may be made for a CJRS bonus if such a claim “is contrary to the exceptional purposes of CJRS or [CJRS Bonus]”.
Eligibility for CJRS Bonus
To be eligible for a CJRS Bonus, the employer must, at the time of making a claim for a CJRS Bonus, have:
- a PAYE scheme registered on HMRC’s real time information system for PAYE
- made a CJRS claim in respect of a “qualifying employee” and
- delivered to HMRC the information required to make real time returns in relation to all relevant payments made between 6 April 2020 and 5 February 2021 (inclusive)
An employer will remain eligible for a CJRS Bonus if the employer has submitted inaccurate information to HMRC, providing the inaccuracy was not “abusive or otherwise contrary to the exceptional purposes of CJRS or [CJRS Bonus]”. It appears, therefore, that inadvertent accounting errors will not disqualify employers from receiving a CJRS Bonus, if otherwise eligible.
The employer may only claim a CJRS Bonus in respect of a “qualifying employee”.
A “qualifying employee” is an employee in respect of whom the employer has made a claim under the CJRS. The employer must continue to employ the employee until at least 31 January 2021 and the employee must not be on notice of termination on or before this date. For these purposes, it is irrelevant whether notice of termination is given by the employer or the employee: an employer may be ineligible to claim a CJRS Bonus if the employee serves notice to terminate their employment before 31 January 2021, even if the employer was intending to continue that employment beyond this date.
The employer must also make at least one payment to the employee in each of the following periods (noting that these periods do not align with calendar months):
- 6 November 2020 - 5 December 2020 (inclusive)
- 6 December 2020 - 5 January 2021 (inclusive)
- 6 January 2021 - 5 February 2021 (inclusive)
The total value of these payments must be at least £1,560.
Impact of TUPE
For the purpose of eligibility for a CJRS Bonus, a TUPE transfer is treated as terminating the employment of the relevant employee. Only the employer who submitted a claim under the CJRS in respect of the relevant employee may claim a CJRS Bonus. Where a TUPE transfer of previously furloughed staff takes place before the period for claiming a CJRS Bonus opens (15 February 2021), both the previous and new employers may be ineligible to claim a CJRS Bonus.
Where TUPE applies and the new employer has not submitted a CJRS claim in respect of a transferring employee (maybe because the transfer occurs after the end of the CJRS, because the new employer chooses not to furlough the employee or chooses not to claim under the CJRS), the new employer will not be eligible for a CJRS Bonus. This is the case even where the previous employer had submitted a claim under the CJRS in respect of that employee. The previous employer would also be disqualified from claiming a CJRS Bonus, even though technically the employment of the relevant employee is continuing.
Time period for claiming CJRS Bonus
The employer must submit a claim for a CJRS Bonus during the period 15 February 2021 and 31 March 2021 (inclusive).
Before the employer can claim the CJRS Bonus, it will to need to have reported all payments made to the relevant employee between 6 November 2020 and 5 February 2021 to HMRC through Full Payment Submissions via Real Time Information.
The employer must include any CJRS Bonus payments as income when calculating its 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.
Other changes to CJRS
Deadline for submitting claims under CJRS
The Direction confirms the time limit for making claims under the CJRS is 30 November 2020. This is the last day on which employers can submit or change claims for periods ending on or before 31 October 2020. After 30 November 2020, employers will not be able to submit any further claims or add to existing claims.
Further tapering of CJRS grant for October 2020
For October 2020, employers will be able to claim a grant under the CJRS of up to 60% of wages (up to a cap of £1,875) for the hours the employee is on furlough. Employers will be responsible for paying all employer National Insurance contributions and pension contributions, and to “top up” their employees’ wages to ensure they receive 80% of their wages (up to a cap of £2,500) for time they are furloughed. Employers may choose whether to “top up” their employees’ wages above the 80% total and £2,500 cap for the hours not worked.