As the pandemic has evolved, so has the UK Government's approach to grants which were available. The following is a summary of previously available COVID-19 grants:
(a) Small Business Grant: £10,000 to all businesses regardless of sector who were eligible for small business rate relief (rateable value less than £15,000) or rural rate relief (e.g. being the sole post office in a small village). Closed with the last grants made by 30 September 2020. Businesses who think they should have, but did not, receive the relevant grant should contact their local authority.
(b) RHL Business Grant: £25,000 to all retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000. Closed with the last grants made by 30 September 2020. Businesses who think they should have, but did not, receive the relevant grant should contact their local authority.
(c) Discretionary Grant: £25,000 or up to £10,000 (discretionary) to small businesses who had "suffered a significant fall in income due to the COVID-19 crisis" but were not eligible for the Small Business Grant or RHL Business Grant.
November Lockdown Grant: Businesses that were required to close during the national lockdown from 5 November to 2 December 2020 were entitled to a grant of (i) £1,334 for sites with a rateable value of £15,000 and less, (ii) £2,000 for sites with a rateable value of over £15,000 but less than £51,000 and (iii) £3,000 for sites with a rateable value of £51,000 or more. Different local authorities are applying different cut-off dates for applications (many in January 2021). Any businesses who think they may be entitled to (but have not received) the November Lockdown Grant should contact their local authority urgently.
(e) Christmas Pub Grant: Pubs (that were established before 1 December 2020 and subject to Tier 2 or Tier 3 restrictions from 2 December 2020) that derive less than 50% of their revenue from food sales were entitled to a one-off grant of £1,000. Different local authorities are applying different cut-off dates for applications (many in January 2021). Any businesses who think they may be entitled to (but have not received) the Christmas Pub Grant should contact their local authority urgently.
As the response to COVID-19 has evolved, the UK Government established grant schemes more reactive to toward local (rather than pure national) lockdowns. These are:
2021 National Lockdown Top-Up Grant: The UK Government has announced that it is going to be making an additional one-off grant available to businesses as a result of the third UK national lockdown announced on 4 January 2021. Such grant will entitle businesses which have been required to close (and which are not able to operate effectively remotely) as a result of the national restrictions to a one-off top-up grant as follows: (i) £4,000 for businesses with a rateable value of £15,000 or under, (ii) £6,000 for businesses with a rateable value between £15,000 and £51,000 and (iii) £9,000 for businesses with a rateable value of over £51,000.
This top-up grant is in addition to the Local Restrictions Support Grant (Closed Businesses) detailed immediately below.
Local authorities have not yet operationalised the new grant (awaiting formal guidance from central government). It is expected that it will apply in a similar fashion (regarding number of premises etc.) as the Local Restrictions Support Grants detailed immediately below.
Local Restrictions Support Grant (Closed Businesses): This grant is available for businesses (such as, but not exclusively, bars and restaurants) which have been required to close either (i) for at least 14 days as a result of Tier 2, Tier 3 or Tier 4 local lockdown restrictions or (ii) subject to detailed confirmation by the UK Government as at the date of this note, for the duration of the third UK national lockdown announced on 4 January 2021.
- Eligible businesses will be entitled to a grant of (i) £667 for each 14-day qualifying restrictions period for sites with a rateable value of £15,000 and less, (ii) £1,000 for each 14-day qualifying restrictions period for sites with a rateable value of over £15,000 but less than £51,000 and (iii) £1,500 for each 14-day qualifying restrictions period for sites with a rateable value of £51,000 or more.
- Businesses with more than one premises within the zone will be entitled to a grant for each premises. The rateable value applied will be those that existed at the beginning of the restrictions.
- To be eligible, the business will be have to pay business rates and have been required to close (i.e. not chose to do so) as a result of local or national restrictions starting on or after 9 September 2020. They will have been deemed to have been required to close for these purposes if their usual customer service is in-person (which has been prohibited) continuing to provide an alternative permitted business (such as a restaurant starting to do take-aways) will not invalidate a claim. Businesses entitled to the Nightclub (etc.) Grant (see below) are not entitled to the Local Restrictions Support Grant.
Local Restrictions Support Grant (Open Businesses): It is not only those businesses that are required to outright close that suffer from local restrictions. For example certain hospitality services may remain open, but only on a reduced hours basis. The criteria and operation of this scheme has been heavily delegated to local authorities, but it is expected to target hospitality, hotel, bed & breakfast and leisure businesses. Again the value of the grant awarded per business is tied to the "local knowledge and discretion [of the local authorities] relative to their economic need" (and therefore may vary according to each local authority), but will be based on the rateable values of business sites, which the UK Government anticipates to be as follows (subject to a local need to deviate): (i) £467 for each 14-day period for sites with a rateable value of £15,000 and less, (ii) £700 for each 14-day period for sites with a rateable value of over £15,000 but less than £51,000 and (iii) £1,050 for each 14-day period for sites with a rateable value of £51,000 or more.
Nightclub (etc.) Grant - National Restrictions: Certain business such as nightclubs were required to close nationally on 23 March 2020 and are still not able to open. Such businesses are entitled, for the period from 1 November 2020 (but not retrospectively) to claim for a cash grant of: (i) £667 for sites with a rateable value of £15,000 and less, (ii) £1,000 for sites with a rateable value of over £15,000 but less than £51,000 and (iii) £1,500 for sites with a rateable value of £51,000 or more) for each 14 day period they are closed from their local authorities.
Additional Restrictions Grant - National or Local Restrictions: The UK Government accepts that not all businesses struggling as a result of COVID-19 will be sufficiently covered by the above summarised grants. For example, businesses with no rateable property will not be eligible for any such grants. Therefore an additional discretionary fund has been made available to local authorities to provide funds to such businesses in need. While the UK Government have delegated such funds to the discretion of local authorities, they expect it to be used to support businesses (such as suppliers of the retail, hospitality and leisure sectors as well as the events sector etc.) which, while not legally forced to close, are nonetheless severely impacted by the restrictions.
Grants paid based on business rates are expected to be made to the person who (according to the billing authority's records) was the ratepayer for the property as at the date of the relevant restrictions first being applied. In a shared office arrangement, a more typical arrangement is that the landlord charges a rent inclusive of rates (to the extent that they are payable, as many small businesses in particular already benefit from reliefs). In this case, it's likely that the landlord will receive the grant but politically is likely to be under pressure to share the benefit of this with the actual occupants in proportion to their rental contributions.
The above summarised grants are subject to the relevant business not exceeding permitted state aid limits and certain insolvency restrictions. Following the end of the Brexit implementation period on 31 December 2020, the UK is no longer subject to EU state aid rules. It is however subject to state aid restrictions in various Free Trade Agreements globally, including the new UK-EU Trade and Cooperation Agreement (the "UK-EU TCA"). While state aid rules are complex and different Free Trade Agreements apply different tests, the UK Government's support in response to COVID-19 will broadly be in compliance with its obligations under the UK-EU TCA if it is (i) less than 325,000 Special Drawing Rights (c. £345,000) per beneficiary over a three-year period and therefore de minimis, (ii) a targeted and proportionate response to a national or global economic emergency or (iii) permitted under the EU "Temporary Framework" (which has its own higher de minimis level which applies in certain circumstances) which will continue to apply to schemes that were already in operation before 31 December 2020.
Businesses who think they might be eligible for the above summarised grants should contact their local authorities (and check their websites) as they are not currently expected to be paid automatically as was the case for some of the previous COVID-19 grants.
For more information, please contact:
Partner, Head of Finance
+44 20 7295 3304
+44 20 7295 3451
+44 20 7295 3227