HMRC has provided grants to businesses in sectors such as retail, hospitality and leisure through various Grant Funds, typically based on rateable value. Business who weren’t eligible for these Funds may be eligible for the Local Authority Discretionary Grant Funds.
As the name suggests, the funds are distributed at the discretion of your local council, in the form of a grant of £25,000, £10,000 or any amount under £10,000.
Who is eligible?
The eligibility criteria for the Grant Fund are the following:
- the business must be based in England;
- the company must have “relatively high” fixed property-related costs;
- the business occupies property (or part of a property) with a rateable value or annual mortgage/rent payments below £51,000;
- the company was trading on 11 March 2020.
When applying, business will need to show that they suffered sensible losses due to COVID-19.
HMRC asked local councils to prioritise businesses such as the following:
- small businesses in shared offices or other flexible workspaces, such as units in industrial parks or incubators;
- regular market traders;
- bed and breakfasts paying council tax instead of business rates;
- charity properties getting charitable business rates relief, which are not eligible for small business rates relief or rural rate relief.
Local councils have discretion about how to prioritise this funding. You should check with your council for details of their scheme.
Businesses who are already receiving any of the following forms of funding are NOT eligible for the Discretionary Grants Fund:
- Small Business Grant Fund;
- Retail, Hospitality and Leisure Grant;
- Fisheries Response Fund;
- Domestic Seafood Supply Scheme;
- Zoos Support Fund;
- Dairy Hardship Fund.
However, recipients of other schemes such as the Coronavirus Job Retention Scheme or the Self-Employment Income Support Scheme are still eligible to apply for Discretionary Funds, and vice versa.
State Aid Implications
Discretionary Grants count towards state aid, like other COVID-19 measures.
Payments of £10,000 or less count towards the total de minimis state aid. Under de minimis, you’re allowed to receive up to €200,000 over a 3 year period. If you have reached that threshold, you may still be eligible for funding under the COVID-19 Temporary Framework.
Payments of £25,000 count as state aid under the COVID-19 Temporary Framework, for which the limit is set at €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.
How to apply
The application process varies depending on your local authority. Visit your council’s website to learn more about details.
Once your local council has run the application process, you may be awarded a grant, which is not repayable but is taxable. Only businesses which turn a profit once grant income is included will be subject to tax.