State aid and Subsidy Allowances
European Union laws restrict the amount of state funding businesses can receive. This includes government grants, loans or tax reductions. 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. The EU state aid rules that applied: 200,000 Euros received over a three year period which covers the current financial year, running from April 2020 to March 2021, and the two preceding financial years, plus 800,000 Euros received over the period March 2020 to December 2020.
A subsidy refers to a grant, a tax break, a loan, or other form of financial assistance paid from public resources. To search and check how much subsidy has been awarded to a business please go to the GOV.UK website
The new statutory subsidy control regime will replace EU state aid rules, which applied in the UK until the end of the transition period in December 2020 and the TCA. The updated scheme rules do not apply retrospectively. The United Kingdom remains bound by its international commitments, including subsidy obligations set out in the Trade and Cooperation Agreement (TCA) with the EU. Guidance 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 or TCA document can be found on the European Commission website.
Business rates discretionary relief and grants to ratepayers is likely to amount to a subsidy. Any relief provided by Local Authorities under these schemes will need to comply with the UK’s domestic and international subsidy control obligations (see the guidance Guidance on the UK’s international subsidy control commitments - GOV.UK (www.gov.uk) which explains the subsidies chapter of the UK-EU Trade and Cooperation Agreement (TCA), World Trade Organisation rules on subsidies, and other international subsidy control commitments).
There are three subsidy allowances set out below:
Small Amounts of Financial Assistance Allowance
To the extent that a business is seeking to apply for relief that falls within the Small Amounts of Financial Assistance Allowance, Article 364 of the TCA allows an economic actor (e.g. a holding company and its subsidiaries) to receive up to 325,000 Special Drawing Rights (£343,000 as at 9 December 2021) in a three-year period (consisting of the current financial year and the two previous financial years). To administer a subsidy under the Small Amounts of Financial Assistance Allowance it is necessary for the business to confirm that the award of subsidy will not result in the economic actor having received more than £343,000 of subsidy under the Small Amounts of Financial Assistance Allowance.
The COVID-19 Additional Relief Fund Allowance
Where the Small Amounts of Financial Assistance Allowance has been reached, additional relief/grants may be awarded in compliance with the principles set out in Article 366 of the TCA and in compliance with Article 364.3 of the TCA. For the purposes of this scheme, the COVID-19 Additional Relief Fund Allowance, permits an economic actor to receive additional relief of up to a further £1,900,000 for COVID-19 related losses.
This may be combined with the Small Amounts of Financial Assistance Allowance to permit an economic actor to receive up to £2,243,000 from the schemes (or less if they have already used some of their Small Amounts of Financial Assistance limit or claimed other COVID-19 related subsidies). It should be noted that Extended Retail Discount granted in either 2020/21 or 2021/22 does not count towards these allowances, but BEIS business grants (throughout the 3 years) and any other subsidies claimed under the Small Amounts of Financial Assistance limit (such as the Retail Relief in 2019/20), or under the EU State aid de minimis limit, in the last three years, should be counted.
COVID-19 Additional Relief Fund Further Allowance
If an economic actor has reached the £2,243,000 limit set out above, then it may still be able to receive up to a further £10 million as a COVID-19 Additional Relief Fund Further Allowance under the schemes, if it satisfies the following conditions:
- The relief relates to uncovered fixed costs (i.e. costs not covered by profits or insurance etc) during the period of COVID-19 (commencing 1 March 2020). An economic actor may benefit from relief up to 70% of their uncovered costs (although this 90% limit does not apply to small businesses with fewer than 50 employees and less than £9 million turnover), and
- The enterprise has shown a decline in turnover during the eligible period of at least 30% compared to the same period in 2019.
Therefore, a business who receives any reliefs or grants from Basingstoke and Deane Borough must agree to inform the council if they are in breach of the above allowances. Any business who received relief or grants should keep necessary documentation to evidence this.
The Government and Basingstoke and Deane Borough Council will not tolerate any business falsifying their records or providing false evidence to gain any discount/relief or grant, including claiming support above these thresholds. A ratepayer who falsely applies for any relief, or provides false information or makes false representation in order to gain relief may be guilty of fraud under the Fraud Act 2006.