After nine months of concerted lobbying effort by the Charity Retail Association and Charity Tax Group, charities have welcomed news that COVID-19 business grant allowances have been increased by the Government. Charities with substantial property retail, hospitality and leisure property portfolios, including charity shops, can now access up to £1m of extra funding with an additional £9m available if a range of eligibility criteria are met.
Businesses on the high street, including charity shops, had previously been denied access to business saving lockdown grants as the UK Government applied EU state aid rules despite the UK no longer being bound by them. The Charity Retail Association and Charity Tax Group, supported by a coalition of leading charities and sector bodies, had called on the Chancellor to increase the limits, arguing that EU restrictions no longer applied and were in any event now more generous than the UK’s limits.
Across the UK, a welcome range of business grants have been announced for high street businesses required to close due to lockdown restrictions, most recently the Restart Grants in England, which will provide a grant of up to £6k per non-essential retail property. These grants are essential to pay major business overheads such as rent, employer contributions to furlough costs and utility costs.
As a result of the changes, businesses in the UK can now claim up to £1.93 million in business grants (an increase from €1m), plus up to an additional £9 million (an increase from €3m) subject to meeting other criteria, including a 30% reduction in turnover. Claims will only be permissible for grants with open payment cycles.
CTG has asked BEIS officials to ensure that local authorities update their guidance and claiming processes ASAP and also to consider whether currently claiming deadlines are still appropriate.
Robin Osterley, Chief Executive of the Charity Retail Association said:
“This change is great news for charity shops and the charities they help support. The previous cap on the maximum amount one charity could receive meant many thousands of charity shops were being denied any business grant support which was putting the future of shops at risk. This announcement unlocks millions in additional Covid-19 grants to support charity shops to bounce back from the lockdown. In addition to charity shops a wide range of other retail and hospitality businesses will benefit meaning this is also a major boost to our High Streets.”
Richard Bray, Acting Chair of the Charity Tax Group said:
“We are pleased the Government has listened to us. For charities with large property portfolios in the retail, hospitality and leisure sectors this will be worth up to £1m and possibly more. It will provide essential support at a time of great financial difficulty. It is now crucial that local authorities allow charities to make claims as soon as possible as there are deadlines for claims to be made at the end of March and May. We will do all in our power to make sure that happens.”
Guidance on new business grant claiming allowances
Guidance on claiming various business grants can be found on the BEIS website here, including periodic Local Restrictions Support Grants and one-off January lockdown grants. Specific guidance for the Restart Grants (available in England) is still to be published but the same rules are expected to apply.
Our understanding of the new limits is as follows, but you are urged to read the guidance in detail:
- Small Amounts of Financial Assistance Allowance – Up to £335,000 per single economic actor over a three year period (previously a €200k de minimis limit applied over a three year period)
- COVID-19 Business Grant Allowance – Up to £1.6m per single economic actor (previously €800k limit was in place)
These allowances can be claimed cumulatively resulting in a total of £1.93m, minus up to €1m of any claims made previously under the old state aid rules. Once exchange rates have been factored in the additional amount charities can now claim is up to £1m. This is not subject to any additional restrictions or eligibility criteria, so should be the minimum you can claim (to the extent that you have sufficient eligible properties and grants available).
In addition, up to £9m can be claimed per single economic actor under the COVID-19 Business Grant Special Allowance (equivalent to the previous €3m limit) again uncovered fixed . Please note that this is subject to meeting a range of eligibility tests including a reduction in turnover of 30%. Charities have expressed concerns about the definition of terms including “economic actor” and “turnover” for the purposes of these rules, as well as the eligible period during which fixed costs must have been incurred and turnover must have been reduced. If your charity plans to claim under this allowance, we strongly suggest that you contact CTG (at [email protected]) so that you can join a group of charities sharing insights on this. If your charity is eligible the total claiming limit across all three allowances will therefore be £10.93m, with previous claims to be deducted from that total.
Charities should note that where a Local Authority has previously rejected an applicant’s application before Thursday 4 March on the grounds that the applicant had reached previous scheme limits, the Local Authority must not revisit this decision. The applicant may however submit a new application if still within a current payment cycle. If an applicant, that has previously reached the subsidy allowance limit, applies for past payment cycles, Local Authorities should not accept applications or make retrospective payments to those businesses where the payment cycle has passed.
The new limits apply across the whole of the UK, but we also await further information on how the devolved nations will implement this guidance/notify their own local authorities.
Information correct as of 3 March 2021 – CTG is very grateful to the Charity Retail Association for compiling this table and allowing CTG to share it with its members
|Country||Periodic Closure Grants||One-off Closure Grants|
|England||Local Restrictions Support Grant (Closed) payable during the closure period. For the first 42-day closure period value of the grant is between £2,001 and £4,500 per premise with a slightly higher amount for the second 44 day closure period.
31 March 2021 for the 42-day period beginning 5 January 2021.
31 May 2021 for the 44-day period beginning 16 February.
|Lockdown Grants: an additional one-off cash payment per retail premises of between £4,000 and £9,000 depending on rateable value.
Application deadline: 31st March 2021
Restart Grants: a second one off payment of up to £6,000.
Application deadline – TBC
|Scotland||Temporary Closure Grant: payable for every four weeks of closure:
£2,000 for premises with a rateable value of up to and including £51,000.
£3,000 for premises with a rateable value of £51,001 or above.
|Top-up grants provide an additional one-off grant per property:
£6,000 for premises with a rateable value of up to and including £51,000.
£9,000 for premises with a rateable value of £51,001 or above.
Deadline: 5th February 2021
|Wales||No periodic closure grants announced.||Business Restrictions Fund: grants are available on a per property basis for December until the end of March:
£6,000 payment for properties with a rateable value of £12,000 or less. Limited to two properties in each local authority area.
£10,000 payment for properties with a rateable value of between £12,001 and £150,000.
In most cases, these payments will have been made in two separate instalments.
|Northern Ireland||Localised Restrictions Support Scheme payments of between £800 and £1,600 per week per premise during the lockdown.
|No one-off grants announced.|
Relevant extracts from BEIS guidance relating to COVID-19 business grant subsidy allowances can be found below.
Update to COVID-19 business grant subsidy allowance
- The EU State aid rules no longer apply to subsidies granted in the UK following the end of the transition period, which ended on 31 December 2020. This does not impact the limited circumstances in which State aid rules still apply under the Withdrawal Agreement, specifically Article 10 of the Northern Ireland Protocol. The United Kingdom remains bound by its international commitments, including subsidy obligations set out in the Trade and Cooperation Agreement (TCA) with the EU. BEIS Guidance for public authorities explaining the subsidies chapter of the TCA, World Trade Organisation rules on subsidies, and other international commitments can be found here.
- On Thursday 4 March new subsidy allowances were established for the COVID-19 business grants schemes, on the basis of the principles set out in Article 3.4 of the TCA.
- From Thursday 4 March Local Authorities must apply the updated scheme rules set out in this guidance document.
- The updated scheme rules set out in this guidance document do not apply retrospectively. Therefore, where a Local Authority has previously rejected an applicant’s application before Thursday 4 March on the grounds that the applicant had reached previous scheme limits, the Local Authority must not revisit this decision. The applicant may however submit a new application if still within a current payment cycle.
- If an applicant, that has previously reached the subsidy allowance limit, applies for past payment cycles, Local Authorities should not accept applications or make retrospective payments to those businesses where the payment cycle has passed. For example, Local Authorities should not accept applications for the LRSG (Closed) Addendum scheme, where the eligibility period was 5 November 2020 to 2 December 2020, as the payment cycle has passed for businesses that had reached the subsidy allowance limit during that period.
Updated COVID-19 business grants subsidy allowances provided on the basis of the TCA
- The following scheme rules are to be applied to COVID-19 business grants on the basis of the EU-UK Trade and Co-operation Agreement (TCA).
- The below scheme rules should be applied to applicants at the level of economic actor, which is defined as an entity or a group of entities constituting a single economic entity regardless of its legal status, that is engaged in an economic activity by offering goods or services on a market.
- There are three subsidy allowances for this scheme set out below: Small Amounts of Financial Assistance Allowance, the COVID-19 Business Grant Allowance and the COVID-19 Business Grant Special Allowance.
Small Amounts of Financial Assistance Allowance
- Grants may be paid in accordance with Article 3.2(4) of the TCA, which enables an applicant to receive up to a maximum level of subsidy without engaging Chapter 3 of the TCA. This allowance is 325,000 Special Drawing Rights, to a single economic actor over any period of three fiscal years, which is the equivalent of £335,000 as at 2 March 2021 (The Special Drawing Right calculator here can be used to calculate the exchange rate on the day the subsidy is awarded: https://coinmill.com/SDR_calculator.html). An applicant may elect not to receive grants under the Small Amounts of Financial Assistance Allowance and instead receive grants only using the below allowances available under this scheme.
COVID-19 Business Grant Allowance
- Where the Small Amounts of Financial Assistance Allowance has been reached, grants may be paid in compliance with the Principles set out in Article 3.4 of the TCA and in compliance with Article 3.2(3) of the TCA under the COVID-19 Business Grant Allowance (subsidies granted on a temporary basis to respond to a national or global economic emergency). For the purposes of these scheme rules, this allowance is £1,600,000 per single economic actor. This allowance includes any grants previously received under the COVID-19 business grant schemes and any State aid previously received under Section 3.1 of the European Commission’s Temporary Framework across any other UK scheme. This may be combined with the Small Amounts of Financial Assistance Allowance to equal £1,935,000 (subject to the exact amount applicable under the Small Amounts of Financial Assistance Allowance using the Special Drawing Right calculator).
COVID-19 Business Grant Special Allowance
- Where an applicant has reached its limit under the Small Amounts of Financial Assistance Allowance and COVID-19 Business Grant Allowance, it may be able to access a further allowance of funding under these scheme rules of up to £9,000,000 per single economic actor, provided the following conditions are met:
- The Special Allowance covers only the applicant’s uncovered fixed costs incurred during the period between 1 March 2020 and 31 March 2022, including such costs incurred in any part of that period (‘eligible period’)
- Applicants must demonstrate a decline in turnover during the eligible period of at least 30% compared to the same period in 2019. The calculation of losses will be based on audited accounts or official statutory accounts filed at Companies House, or approved accounts submitted to HMRC which includes information on the applicant’s profit and loss
- ‘Uncovered fixed costs’ means fixed costs not otherwise covered by profit, insurance or other subsidies
- The grant payment must not exceed 70% of the applicant’s uncovered fixed costs, except for micro and small enterprises (for the purposes of this scheme defined as less than 50 employees and less than £9,000,000 of annual turnover and/or annual balance sheet), where the grant payment must not exceed 90% of the uncovered fixed costs
- Grant payments under this allowance must not exceed £9,000,000 per single economic actor. This allowance includes any grants previously received in accordance with Section 3.12 of the European Commission’s Temporary Framework; all figures used must be gross, that is, before any deduction of tax or other charge
- Grants provided under this allowance shall not be cumulated with other subsidies for the same costs.
- An applicant must be able to provide the necessary documentation to demonstrate it is eligible for funding under this COVID-19 Business Grant Special Allowance. Local Authorities must first verify that an applicant can meet all the criteria set out under this allowance before providing further funding under this allowance.
- Grants provided in excess of the Small Amounts of Financial Assistance Allowance may not be granted to applicants that were defined as an ‘undertaking in difficulty’ (as defined in Annex C below) on 31 December 2019. In derogation to the above, grants can be granted to micro or small enterprises (as defined above) that were already in difficulty on 31 December 2019 provided that they are not subject to collective insolvency proceedings.
- Local Authorities must ensure the remaining applicable provisions of the subsidies chapter of the TCA are complied with. In particular, the Transparency obligations under Article 3.7. The transparency database can be found at https://manageuksubsidies.beis.gov.uk/. All schemes and individual awards over £500,000 must be uploaded within six months of being granted. Any ad hoc awards of at least 325,000 Special Drawing Rights over three years to an individual beneficiary must also be uploaded within six months of being granted. For access to and any further questions on the database, please contact the BEIS subsidy control team at [email protected].
- Local Authorities still need to comply with reporting requirements to the European Commission in respect of grants previously granted under the European Commission’s Temporary Framework before the Transition Period ended on 31 December 2020.