Skip to main content

Government plans are unfair to business and won’t go down well

Announcement that employers of domestic staff who have been on furlough won't have to pay tax on the Job Retention Bonus payment is unfair to business.

The Job Retention Bonus is a taxable payment and therefore businesses will need to include the amount as if they received some income and pay the associated tax. However, if you employ someone in a personal capacity (such as a nanny), the Job Retention Bonus will not be taxable. Essentially, because the person is not running a business, they do not have to pay tax on the payment they receive. This is complete nonsense and establishes an advantage for those that are not operating a business.

In order to incentivise businesses to return and retain furloughed employees to the workplace, the Government is offering employers £1,000 for each eligible employee kept continuously employed until 31 January 2021. To then tax businesses, but not individuals who employ domestic staff, is completely unfair. It won’t go down well with businesses who are still struggling.

Clearly the policy objective behind the Job Retention Bonus is to encourage and retain employment, but not at the expense of businesses.

I think the Government have got this wrong and it would have made sense to exclude personal employees from the Job Retention Bonus scheme. At the very least, the payment should be taxable on the same footing.

Would you like to know more?

If you would like to discuss any of the above guidance, please contact Nimesh Shah or your usual Blick Rothenberg contact.

For any press queries, please contact David Barzilay whose details are to the right.

Check the impact of the Spring Budget Statement with our Tax Calculator Visit our Spring Budget Hub