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News & Portal: HMRC

Minimum Income Threshold examples for claiming the JRS Bonus

16 October 2020  
Posted by: HMRC
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Published 2 October 2020 by HMRC

These examples demonstrate how the minimum income threshold is used for Job Retention bonus claims. The examples may not directly reflect your employee’s circumstances but can be used to see how the minimum income threshold is applied in some common employee scenarios.

 

Example of employer deciding which employees meet the minimum income threshold for the Job Retention Bonus

Z Ltd has 20 employees and furloughed 6 employees. The employer was eligible to make Coronavirus Job Retention Scheme claims for the furloughed employees and made successful claims.

On 1 February 2021 the employer wants to know if they can claim the Job Retention Bonus.

All of the employees who were furloughed have remained employed by the employer and are not serving any notice period. The employer now needs to decide if they meet the minimum income threshold.

Employee A

Alisha works part time for a fixed salary of £1,000 a month, paid on the last day of each month. She was paid in each of the relevant tax periods and her taxable pay in each period was £1,000. The total paid was £3,000. This exceeds the minimum income threshold of £1,560. With tax code 1250L, no income tax was due in any of these periods but the amount paid to Alisha still counts as ‘taxable pay’. Z Ltd can claim the Job Retention Bonus in respect of Alisha.

Employee B

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 was £3,633.40. This exceeds the minimum income threshold of £1,560. Z Ltd can claim the Job Retention Bonus in respect of Bob.

Employee C

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 and makes 5% contributions under a net pay arrangement. 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 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 Z Ltd cannot claim the Job Retention Bonus in respect of Charlotte.

Employee D

Dershil works part time on a fixed salary of £400 paid every 4 weeks. He was paid on 9 November 2020, 7 December 2020, 4 January 2021 and 1 February 2021. His pay in the relevant tax periods was:

  • 6 November to 5 December 2020 - £400
  • 6 December 2020 to 5 January 2021 - £800
  • 6 January to 5 February 2021 - £400

Dershil received a payment of taxable earnings in each relevant tax period and the total taxable pay was £1,600. This exceeds the £1,560 minimum income threshold so Z Ltd can claim the Job Retention Bonus in respect of Dershil.

Employee E

Ebrill works part time on a fixed salary of £400 paid every 4 weeks. She was paid on 3 December 2020, 31 December 2020 and 28 January 2021 so her pay in the relevant tax periods was:

  • 6 November to 5 December 2020 - £400
  • 6 December 2020 to 5 January 2021 - £400
  • 6 January to 5 February 2021 - £400

Ebrill received a payment of taxable earnings in each relevant tax period but the total taxable pay is £1,200. This is less than the £1,560 threshold so Z Ltd cannot claim the Job Retention Bonus in respect of Ebrill.

Employee F

Frans works full time for Z Ltd, 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 was £8,000 and exceeds the minimum income threshold of £1,560. Z Ltd cannot claim the Job Retention Bonus in respect of Frans.


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