We’re being inundated with questions about “Subsidy Allowances”, in line with the Restart Grant application. Whilst I am unable to give you a ‘one size fits all’ answer, because the declaration for each business depends on the aid you have received, I will attempt to give more background information to help clarify the queries I have been getting.
What is the Subsidy Allowance?
The Subsidy Allowance has replaced State Aid. EU State aid rules no longer apply to subsidies granted in the UK following the end of the Brexit transition period.
It is your responsibility to check if your company is eligible for the aid which you are applying for (in this case Restart Grant, but could also be Additional Restrictions Grant, or any other funding in future years). There are limits on the amount of aid each business is permitted to receive.
Which allowance should I select?
When you apply for the Restart Grant, you will be asked to confirm if you are applying for the grant under one or more of the new subsidy allowance thresholds. There are three different allowance thresholds laid out in the new Trade and Co-operation Agreement with the EU (TCA). This means you must not have exceeded your total permitted allowance of government subsidy. You get:
-*- up to £335,000 (subject to exchange rates) over any period of three years under the Small Amounts of Financial Assistance Allowance
-*- up to £1,600,000 under the Covid-19 Business Grant Allowance
-*- up to £9,000,000 under the Covid-19 Business Grant Special Allowance, if you’ve met the limits under the other two allowances and you meet special conditions
See the Allowance Thresholds section at the end of this document for the full details.
I can’t remember what grants I have received.
You will need to go back through your business bank account for the past 3 years to verify grants/aid received, as well checking for any other state support (for example a fully funded training course).
A number of you have questioned the correct name for each grant you have received during the pandemic. EDC have produced an overview of all COVID-19 business grants to date to help: https://www.eden.gov.uk/media/5972/all_business_grants_to_date_overview.pdf
Don’t forget you are being asked to declare support from the previous three years. If you are thinking that your business has received less than £335,000 during the pandemic, you must also think back 3 years to any other government subsidies you may have been awarded. For example, state aid funded training, matched funding for website development, R&D or professional business support. If you have received over the £335,000 permissible you can still apply for the Restart Grant, but you must use the Covid-19 Business Grant Allowance.
If you are applying under the COVID-19 Business Grant Allowance and / or the COVID-19 Business Grant Special Allowance you will need to supply the necessary documentation to demonstrate your eligibility for this award. More details towards the end of this document.
If you still need more clarification, read on and I’ll go into a bit more detail.
What is a ‘subsidy’ (formerly referred to as State Aid)?
A subsidy is any advantage granted by public authorities through state resources on a selective basis to any organisations that could potentially distort competition and trade in the European Union (EU) and Northern Ireland. The definition is very broad because ‘an advantage’ can take many forms. It is anything which an undertaking (an organisation engaged in economic activity) could not get on the open market. Under the Trade and Co-operation Agreement with the EU (TCA), a ‘subsidy’ is broadly similar to what was previously referred to as ‘State Aid’.
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 on the GOV.UK website.
On Thursday 4 March government introduced new subsidy allowances for the COVID-19 business grants schemes, on the basis of the principles set out in Article 3.4 of the TCA.
“Under the new scheme rules the maximum level of subsidy that an economic actor may receive are:
-*- 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 20211. 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 a number of conditions are met (visit Restart Grant: guidance for local authorities (publishing.service.gov.uk) for more information at point 97)
In total an economic actor could combine the allowances and potentially receive a total allowance of £10,935,000 from these business grants schemes (subject to the precise applicable amount calculation for the Small Amounts of Financial Assistance Allowance).
What information do I need to supply to be granted aid in line with the updated COVID-19 business grants subsidy allowance(s)?
If you are applying under the COVID-19 Business Grant Allowance and / or the COVID-19 Business Grant Special Allowance you will need to supply the necessary documentation to demonstrate your eligibility for this award.
It is your company’s responsibility to check that it is eligible, and by the very submission of an application you are declaring that if awarded payment that you are complying with and will not exceed the relevant permitted allowance thresholds. If you have any doubt as to your position you must seek appropriate advice before applying as the responsibility lies with the business.
When submitting your application for a COVID-19 related grant support (Restart Grant etc) you will be asked to confirm, if you are applying for this grant aid under one or more of the new subsidy allowance thresholds. If you are applying under the COVID-19 Business Grant Allowance and / or the COVID-19 Business Grant Special Allowance you will need to supply the necessary documentation to demonstrate your eligibility for this award.
The Local Authority is reliant on you to provide correct and timely information on what subsidies (including those previously referred to as ‘State Aid’) your company has received. Therefore, it is very important that you take care to ensure that the information provided to the local authority is accurate and up to date, particularly if your company may be coming close to the allowance thresholds.
If your company has accepted COVID-19 aid from the local authority which has caused your organisation to exceed the new domestic subsidy allowances, the local authority shall be entitled to recover any such payments from you.