Can I Claim Employee Salaries and Wages as a Business Expense in Guernsey?
Yes — salaries and wages paid to employees are fully deductible against Guernsey corporate income tax. The company must operate the ETI (Employees Tax and Insurance) PAYE system, deducting income tax and social insurance from gross pay and remitting to the Revenue Service monthly.
What Revenue Service, States of Guernsey says
Employee remuneration (salary, wages, bonus, commission, benefits in kind above the de minimis threshold) is deductible as a trading expense. The employer must operate the ETI system or face penalties for late/incorrect deductions.
When you can claim
- Monthly salary payments to employees
- Bonuses and performance-related pay
- Employer social insurance contributions (6.5%) — these are a deductible cost in addition to the salary
- Benefits in kind provided to employees (provided they are commercially justified)
- Redundancy and severance payments (subject to Employment Protection rules)
When you cannot claim
- Remuneration to non-employees (contractors should be invoiced separately)
- Dividends paid to shareholder-directors (this is a distribution, not salary)
- Excessive remuneration to connected parties not at arm's length
Good to know
Pro tip: In Guernsey there is no national minimum wage in the same statutory sense as the UK, but the States of Guernsey sets minimum employment rates. Ensure ETI returns are filed monthly by the last working day of the following month. The employer SI contribution of 6.5% is itself a deductible cost — remember to claim it.
Related expenses
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