Covid-19: Guernsey sets reclaiming support threshold at £50k

Guernsey's self-employed and sole traders can make £50,000 before being asked to return financial support.

The reintroduced payroll co-funding scheme includes a new clause allowing the States of Guernsey to recoup Covid support at the end of the year.

However, after criticism from businesses the States recognised profit up to this limit as "personal income".

Coronavirus cases rose to 142 by Friday, six days after the bailiwick declared full a lockdown.

The co-funding scheme pays 80% of Guernsey's £8.70 minimum wage to employees up to 42 hours a week, with businesses obliged to pay the remaining 20%.

It is anticipated it will cost the States £2.5m per week and will open for claims on 1 February.

The clarification to the scheme was made to account for business owners who do not pay themselves a regular salary, the States explained.

Any support recovered will follow the submission of a 2021 tax return, meaning repayment would not be requested until 2022 at the earliest.

Flexible payment arrangements will be available to spread any cost incurred, the States said.

Profit will be calculated as a business' trading income, also known as turnover, minus business expenses like the cost of goods sold, wages, rent and utilities.

However, businesses cannot claim a deduction for capital expenditure, like the purchase of a new car or computer.

When a majority shareholder of a company is also employed by the business, their salary will be added back to the profit and support will only be reclaimed if the total exceeds the £50,000 limit.

The recovery does not apply to charities or not-for-profit organisations, or any payments of financial support in 2020, the States said.

Deputy Mark Helyar, who is leading on treasury matters for the Policy and Resources Committee, said the decision was made after the committee "listened to the concerns that businesses have shared".

He said: "We want businesses to prosper and the support recovery clause is about providing support where it is genuinely needed.

"With public finances under significant pressure, no-one in the community would want financial support to be handed out where it is not needed."

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