Lockdown #2 – Business Support

Now we find ourselves in lockdown #2, we will start sharing all the info we have, via mail shots, social media and articles on our website.

Feel free to fire questions at us, either via email to your de garis contact, or in our Facebook group https://www.facebook.com/groups/degarisXERO where discussion will hopefully help others and reduce individual queries to us.

Business Support Available

  • The Island entered into a new lockdown from 23rd January, 2021. Business support will be made available to those businesses whose ability to trade will be severely impacted and which need financial support during the period of the lockdown.
  • Businesses who have sufficient resources to cope with a short period of lockdown are asked to consider carefully if they really need this support. The States will seek to recover some or all of the support paid to businesses that subsequently make a profit during 2021 at a later date. Businesses will be required to agree to this before receiving support.  Clarification on this point came today in a media release, and detail below.
  • Eligible businesses will be able to apply through the Payroll Co-Funding Scheme to receive a reimbursement of 80% of the minimum wage (which is now £8.70 per hour) for their employees, requiring them to cover the other 20% as a minimum. This is consistent with the early stages of the previous lockdown and will remain under review.
  • The scheme will also be open to sole traders and the self-employed.
  • Employers will be able to claim for the hours normally worked by their employees (or themselves if they are self-employed), up to a maximum of 42 hours per week. Claims will be processed on a monthly basis, one month in arrears.
  • NOTE: Businesses that are currently claiming Business Support as a result of the current travel restrictions can continue to claim support as normal. No changes are to be made to the current arrangements in place for this scheme. This Guidance therefore only refers to those businesses making new claims as a result of the new lockdown.

Is my business eligible?

The list of eligible sectors and details for businesses wanting to apply for payroll co-funding can be found at https://covid19.gov.gg/guidance/business

Individuals wanting to seek support from the hardship fund should email [email protected] or call 01481 732516.

What might I need to pay back?

In reinstating the payroll co-funding scheme, the Committee included a clause in the support package which enables sums paid to businesses to be recovered if these businesses ultimately make a profit this year. THIS HAS BEEN REMOVED FOR JAN 2021 and FEB 2021 claims.

For March 2021 claims, the payback clause may may apply:

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. This recognises the fact that some business owners do not draw a regular salary from their businesses and that their profit is effectively their personal income.

As an example of this clarification, if a sole trader or someone who is self-employed claimed payroll co-funding during 2021 and made £50,000 profit, none of this support would be recovered by the States. However, if the profit was £55,000, the business would be asked to repay some or all of any business support received in 2021 up to a maximum value of £5,000, with the initial £50,000 considered as earnings.

Any support that is to be recovered will be done so following the submission of the tax return for 2021. Therefore, any repayment would not be requested until 2022 at the earliest. Time to pay and staged payment arrangements would be agreed to spread any cost.

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.

To clarify, any payroll co-funding payments made during 2020 were not subject to this new clause. Repayment of any support received in respect of 2020 is entirely voluntary.

This recovery of support does not apply to charities or not-for-profit organisations.

The profit of the business will be calculated as turnover (a business’s trading income) less all allowable business expenses, including cost of goods sold, wages of employees, rent and utilities. Businesses will not be able to claim a deduction for capital expenditure, such as the purchase of a new motor vehicle or computer.

Conditions of the Scheme?

To be eligible for support you must:

  • Businesses must work within an eligible economic sector (see above link)
  • Businesses can claim in respect of anyone that was employed as of 23 January 2021.
  • Businesses (including sole traders) must have been registered with the Revenue Service for social insurance by 31 December 2020 and have either submitted returns as an employer for quarter 4 of 2020 or in respect of a sole trader, paid class 2 contributions (or set up a direct debit to pay these). 

Support will be calculated based on the normal contractual hours worked by your employee(s) up to a maximum of 42 hours per week.

When and how can I claim?

You can not apply until Feb 1st, so please don’t try before then.

From Feb 1st, applications can be made for reimbursement payments for the period 23rd Jan to 31st Jan 2021.

February payroll reimbursement applications will open on 1st March 2021.

If any businesses will not be able to wait until 1st March for reimbursement of February payroll, please get in contact with business support at [email protected] or by calling 01481 743803.

Applications for Payroll must be applied for online – follow this link here.  

When making a claim for Payroll Co-funding, you will be required to make a declaration that support is needed. You will need to answer a few questions to check eligibility before your claim can be processed.

What Information will businesses need?

  • Your States of Guernsey Vendor Account Number (this can be found on your remittance advices from last lock down or needs to be requested if new business via a registration form which should be on line shortly on https://covid19.gov.gg/ under business support.)
  • Business Name as you are known to the revenue services
  • Business Tax ID Your alpha numeric number for your business. e.g. A1 123456 or Employer Tax ID can be found on quarterly returns.
  • Business sector details e.g. which industry your business is classified as.
  • Turnover in the last month in 2021
  • Turnover for the same month in 2019 (or 2020 if not trading in 2019)
  • Evidence that staff have been paid in the month i.e. copies of payslips to upload online.

How much can I claim?

Eligible businesses will receive 80% of the minimum wage – which is now £8.70 per hour – for their employees, requiring them to top up the other 20% as a minimum. This is consistent with the early stages of the lockdown last year and will remain under review. The scheme will also be open to sole traders and the self-employed. Employers will be able to claim for the hours normally worked by their employees (or themselves if they are self employed), up to a maximum of 42 hours per week.

Is the Payroll-Co Funding taxable?

The amounts paid to the employer under the co-funding scheme will be treated as a business receipt and will be taxable. The full wages paid will be an allowable expense.