Payroll co-funded firms can keep £50,000 of profit

The announcement was made today in the wake of comments by Policy & Resources president Peter Ferbrache on Thursday in which he sought to clarify what was being asked of local companies.

Firms that need financial support to make it through this lockdown should apply to the States for it, but if a company makes a good profit they are being asked to repay that financial support to the States.

Deputy Ferbrache clarified this on Thursday after concerns were expressed by businesses: 'We’re not looking to say that if you get payroll co-funding that because you’ve made a small or nominal profit you’re going to have to repay the money.'

Some companies bounced back well after the first lockdown and had managed to make 'significant' profits and he asked firms that cope and make a profit not to claim the benefit: ‘If you do need to claim it, claim it. The message is simple, if you don’t need to claim money then don’t claim it, but if you do then do claim it, and we’ll do our best to get it to you as quickly and with as little bureaucracy as possible.’

A further statement yesterday provided some hard figures to go with the policy: 'The committee have agreed that the first £50,000 of profit for self-employed and sole traders will be considered as personal income and therefore not recoverable by the States of Guernsey,' said the statement.

This means that if someone self-employed or a sole trader claimed payroll co-funding this year and made £50,000 profit, none of it would be recovered by the States.

If that same company made £55,000 it would be asked to repay some or all of the business support it received, up to £5,000.

This would be recovered from the firm's 2021 tax returns, so the payment would not be requested until 2022 at the earliest.

'Where a majority shareholder of a company is also employed by the business, their salary will be added back to the profit of the company, with business support funding only recovered if that figure then exceeds £50,000,' said the statement.

'Businesses will not be able to claim a deduction for capital expenditure, such as the purchase of a new motor vehicle or computer.'

The new arrangements will not apply to any funding received last year.

It does not apply to charities or voluntary groups.

'We've listened to the concerns that businesses have shared with us and we hope that this clarification will provide some reassurance,' said P&R treasury lead Deputy Mark Helyar.

* Any business that cannot wait until 1 March for reimbursement of the February payroll it is asked to contact business.support@gov.gg or call 743803.

* Eligible businesses will be able to apply from the 1st February in order to claim for the period commencing 2d January.

* The list of eligible sectors and details for businesses wanting to apply for payroll co-funding can be found atcovid19.gov.gg/guidance/business