What business support grants are available due to COVID-19?

This page provides information on:

• Restart Grants
• Additional Restrictions Grant Funding (ARG)
• Local Restrictions Support Grant (LRSG)
• Self-Employment Income Support Scheme (SEISS)
• Business rates

Background

The Small Business Grant Fund, the Retail, Hospitality and Leisure Grants and Local Authority Discretionary Grants which ran through the initial lockdown period have now largely expired.

Closed business lockdown payments for retail, hospitality and leisure
One-off payments will be available to closed retail, hospitality and leisure businesses required to close from 5 January 2021. It is provided on a ’per property’ basis meaning that the owner of multiple properties of this description may be eligible for multiple grants. They are available in addition to existing support grants such as those listed below which are operational during periods of national lockdown such as the LRSG (Closed) and the ARG (see below).

Businesses which have been required to close their main, in-person service but adapts to operate a takeaway, click and collect or online with delivery will be considered eligible.

There will also be £594 million discretionary fund available for local authorities to support other types of impacted businesses which are ineligible for the top up grant.

The levels of support are:

• £4,000 for businesses with a rateable value of £15,000 or under
• £6,000 for businesses with a rateable value between £15,000 and £51,000
• £9,000 for businesses with a rateable value of over £51,000.

The scheme will close for applications on 31 March 2021 and is accessible via local authorities. It is up to local authorities to decide whether or not they open an application for this funding or whether they base it on their records of businesses having previous support funding.

Restart Grants

From April 2021, one-off Restart Grants of up to £6,000 per premises will be made available to non-essential retail businesses that were ordered to close during lockdown. Businesses within the hospitality and other sectors opening later, such as accommodation and leisure, will be given grants of up to £18,000 per premises. The grant funding is to go towards the cost of reopening safely.

The Restart Grant will support non-essential retail premises with one-off grants of up to £6,000 in Strand One of the Restart Grant. The following thresholds apply for these businesses: 

1. Businesses occupying hereditaments appearing on the local rating list with a rateable value of exactly £15,000 or under on 1 April 2021 will receive a payment of £2,667. 
2. Businesses occupying hereditaments appearing on the local rating list with a rateable value over £15,000 and less than £51,000 on 1 April 2021 will receive a payment of £4,000. 
3. Businesses occupying hereditaments appearing on the local rating list with a rateable value of exactly £51,000 or over on 1 April 2021 will receive a payment of £6,000. 

The Restart Grant will also support hospitality, accommodation, leisure, personal care and gym business premises with one-off grants of up to £18,000 in Strand Two of the Restart Grant. The following thresholds apply for these businesses: 

1. Businesses occupying hereditaments appearing on the local rating list with a rateable value of exactly £15,000 or under on 1 April 2021 will receive a payment of £8,000. 
2. Businesses occupying hereditaments appearing on the local rating list with a rateable value over £15,000 and less than £51,000 on 1 April 2021 will receive a payment of £12,000. 
3. Businesses occupying hereditaments appearing on the local rating list with a rateable value of exactly £51,000 or over on 1 April 2021 will receive a payment of £18,000.

The grants are per property and some businesses may receive more than one grant if they have more than one eligible business.

If a business operates services that could be considered non-essential and also fall into another category, such as hospitality in the higher funding threshold, the main service can be determined by assessing which category constitutes 50% or more of their overall business. The main service principle will determine which threshold of funding a business receives. Businesses will need to declare which is their main service.

In some cases it may not be materially clear whether a business falls into one of the categories, so decisions on the eligibility of these businesses will be at the local authority's discretion.

A guide to the types of business within each category can be found towards the end of this guidance for local authorities.

Businesses that are not within the ratings system will not be eligible to receive funding under this scheme.

These grants appear to replace the monthly grants currently available but ending on 31 March 2021. 

These grants are welcome and will be helpful to members with diversified businesses, especially those in the leisure and hospitality sectors, going towards the cost of reopening their businesses and adhering to social contact limits, etc, that will most likely still be in place.

Will these grant schemes be subject to tax?

Grant income received by a business is taxable. The Local Restrictions Support Grant and the Additional Restrictions Grant will need to be included as income in the tax return of the business. Only businesses which make an overall profit once grant income is included will be subject to tax.

Additional Restrictions Grant funding (ARG)

On 31 October 2020, the government announced the introduction of additional support for local authorities under national and Local COVID Alert Level 3 and 4 restrictions. The government expects the majority of this funding to be used for direct business support grants. 

Which types of business will be eligible and how much funding will be provided?

The ARG funding scheme aims to support businesses severely impacted by coronavirus restrictions when most needed.

Previous guidance for the Additional Restrictions Grant indicated that businesses must have been trading before relevant restrictions were introduced in order to be eligible. This is no longer the case. All businesses that are trading and meet other eligibility criteria may apply to receive funding under this scheme. There is no starting date from which businesses must have been trading in order to qualify for grant funding.

Local authorities can determine how much funding to provide to businesses from the ARG funding provided, and exactly which businesses to target. Local authorities have been encouraged by the government to develop discretionary grant schemes to help those businesses which, while not legally forced to close, are nonetheless severely impacted by the restrictions put in place to control the spread of COVID-19. This could include businesses that supply the retail, hospitality, and leisure sectors, or businesses in the events sector.

Local authorities may also choose to help businesses outside the business rates system, which are effectively forced to close, for example market traders.

Finally, local authorities could use ARG funding to provide additional support to larger local businesses that are important to the local economy, on top of the funding provided to those businesses via the LRSG (Closed) scheme, with due reference to State Aid.

In taking decisions on the appropriate level of grant, local authorities may want to take into account the level of fixed costs faced by the business in question, the number of employees, whether they are unable to trade online and the consequent scale of coronavirus losses.

An additional £425 million of discretionary grant funding will be available for local authorities to distribute through ARG.

From an NFU perspective, this could be used to help businesses that support the leisure and hospitality industries but are ineligible for the Restart Grants or those that are not within the rating system, such as bed and breakfast operations.

Local Restrictions Support Grants (Open) and Local Restrictions Support Grants (Sector)

Due to the introduction of national lockdown restrictions on businesses, these grants will cease to apply. Businesses may receive grant funding under either the Local Restrictions Support Grant (Closed) or the Additional Restrictions Grant Schemes detailed below.

Local Restrictions Support Grants (Closed)

This grant funding is for supporting businesses which have legally been required to close due to local restrictions being put in place.

Funding under this grant scheme was on a 14 day payment cycle to an alternative payment cycle but for 5 November – 2 December a 28-day payment cycle will be applied. During periods of national lockdown, the 28 day cycle also applies.

Businesses that are eligible are those that have been mandated to close by government and include non-essential retail, leisure, personal care, sports facilities and hospitality businesses. Business must have been open as usual and providing in-person services from their business premises but then required to close. It can also include business that operate primarily as an in-person venue, such as pubs and restaurants, but are providing a takeaway service instead.

Levels of funding:

a) Businesses occupying properties appearing on the local rating list with a rateable value of exactly £15,000 or under on the date of the commencement of the widespread national restrictions will receive a payment of £2,001 per 42-day qualifying restriction period.

b) Businesses occupying properties appearing on the local rating list with a rateable value over £15,000 and less than £51,000 on the date of the commencement of the widespread national restrictions will receive a payment of £3,000 per 42-day qualifying restriction period.

c) Businesses occupying properties appearing on the local rating list with a rateable value of exactly £51,000 or above on the commencement date of the widespread national restrictions, will receive £4,500 per 542-day qualifying restriction period.

Subject to State aid limits, businesses will be entitled to receive a grant for each eligible property within the restriction area. So, some businesses may receive more than one grant where they have more than one eligible property.

Local authorities should pay businesses the full 42 day amount as soon as possible.

Exclusions to LRSG

a) Businesses that are able to continue to trade because they do not depend on providing direct in-person services from premises and can operate their services effectively remotely (e.g. accountants, solicitors).

b) Businesses subject to local restrictions that are implemented for less than 14 days and businesses that are closed for less than 14 days are not eligible for grant funding.

c) Businesses that have chosen to close but not been required to will not be eligible for this grant.

d) Businesses which have already received grant payments that equal the maximum levels of State aid permitted under the de minimis and the COVID-19 Temporary State Aid Framework.

Self-Employment Income Support Scheme (SEISS) - fourth and fifth grant announced in the Budget

Updated 3 March 2021

SEISS fourth grant: To support the self-employed across the UK through the next stage of the pandemic, the government confirms that the fourth SEISS grant will be worth 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total.

The grant will cover the period February to April and can be claimed from late April. Self-employed individuals must have filed a 2019-20 Self Assessment tax return to be eligible for the fourth grant. This means that over 600,000 individuals may be newly eligible for SEISS, including many new to self-employment in 2019-20.

All other eligibility criteria will remain the same as the third grant. Further details will be published in due course.

While these support payments will continue to be welcomed by many, they do now have more restrictive criteria in terms of having seen a downturn in demand rather than an increase in costs or business disruption. Members need to carefully consider if they meet the criteria before claiming.

SEISS fifth grant: The government announces that there will be a fifth and final SEISS grant covering May to September. The value of the grant will be determined by a turnover test, to ensure that support is targeted at those who need it the most as the economy reopens.

People whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. The final grant can be claimed from late July. Further details will be published in due course. 

The detailed criteria for claiming this grant will be published later and this will be important in terms of accessibility for members. There does however appear to be a clear requirement for a drop-in turnover rather than profits.

♦ Click here for more information on this from Gov.uk. 

Business rates

Eligible retail, hospitality and leisure properties in England will continue to receive 100% business rates relief until 30 June 2021. A further period of 66% relief for these businesses will run from 1 July 2021 to 31 March 2022.

Business rates relief boosted with new £1.5 billion pot

Ministers have set out plans to provide an extra, targeted support package for businesses who have been unable to benefit from the existing £16 billion business rates relief. A new business rates relief fund of £1.5 billion will be available for businesses affected by COVID-19 outside the retail, hospitality, and leisure sectors.

Many businesses have sought to appeal their rateable values on the basis of a material change in circumstances due to COVID-19. Premises, for example, which could only be partially occupied due to social distancing requirements. The government has stated that COVID-19 related appeal cases of this type will not be considered. Instead, they will provide funding to assist these and other businesses. It will be distributed according to which sectors have suffered the most economically, rather than on the basis of falls in property values.

Government has provided a case study of an office based in Central London that had to reduce occupation levels within the office during lockdown with the majority of employees working from home. Government do not think that this type of property should qualify for support since it has not suffered any economic impact. On the other hand, case study two, a food wholesaler operating from a warehouse outside of London, which sold exclusively to restaurants in London, is likely to be eligible for support due to its turnover being reduced to nil during periods of lockdown and local restrictions.

State aid

For applications made prior to 04 March 2021:

Payments count towards the total de minimis state aid you’re allowed to get over a three-year period - €200,000. If you have reached that threshold, you may still be eligible for funding under the COVID-19 Temporary Framework. The limit for the framework is €800,000.

Your local council will ask you to complete a declaration confirming that:

•    You will not exceed the relevant state aid threshold
•    You were not an ‘undertaking in difficulty’ on 31 December 2019. This applies only to the COVID-19 Temporary Framework.

The undertaking in difficulty test does not apply to small and micro undertakings (less than 50 employees and less than EUR 10 million of annual turnover and/or annual balance sheet) unless they were already in insolvency.

For applications made on or after 04 March 2021:

The following information is taken from the gov.uk website. If you have any queries about how the relevant subsidy limits apply to your business then you should contact the funding provider directly.

The new domestic subsidy allowance for the COVID-19 business support grants took effect on 4 March 2021. Applications made prior to that date are subject to the previous rules.

This scheme is covered by three subsidy allowances:

•    Small Amounts of Financial Assistance Allowance – you’re allowed up to £335,000 (subject to exchange rates) over any period of 3 years.
•    COVID-19 Business Grant Allowance – you’re allowed up to £1,600,000.
•    COVID-19 Business Grant Special Allowance - if you have reached your limits under the?Small Amounts of Financial Assistance Allowance?and COVID-19 Business Grant Allowance, you may be able to access a further allowance of funding under these scheme rules of up to £9,000,000, provided certain conditions are met.

Grants under these three allowances can be combined for a potential total allowance of up to £10,935,000 (subject to exchange rates).

More from NFUonline:

• Advice for employers from the NFU's Specialist Advice Team
• Furlough Scheme and the Coronavirus Job Retention Scheme