What is the subsidy allowance?

The subsidy allowance refers to the provisions which exist to limit the amount of funding any one organisation or business can receive as part of grant schemes put in place by the government. The rules relating to this scheme form part of the Trade and Co-Operation Agreement reached between the United Kingdom and the European Union when the United Kingdom left the European Union. Previously, these rules were known as State Aid.

Business which have received less than 325,000 special drawing rights (the equivalent of £335,000 as at 3rd March 2021) over a period of three fiscal years do not need to take any further action. Any grants paid will be below the threshold that has been set but businesses should note that this threshold covers all branches of the business, including any subsidiary companies within a Group Structure. This is known as the 'Small Amounts of Financial Assistance Allowance'.

Businesses which have received more than the 'Small Amounts of Financial Assistance Allowance' over a period of three fiscal years can opt to receive an additional £1,600,000 as part of provisions enacted to assist businesses impacted by Covid 19. This is known as the 'Covid 19 Business Grant Allowance'. This allowance can be combined with the 'Small Amounts of Financial Assistance Allowance'.

If a business has exceeded the two allowances referred to above it is eligible to receive a further allowance of up to €9,000,000 if the criteria below are met. This known as the 'COVID-19 Business Grant Special Allowance':

a. The Special Allowance covers only the applicant's uncovered fixed costs incurred during the period between 1 March 2020 and 31 March 2022, including such costs incurred in any part of that period ('eligible period');

b. Applicants must demonstrate a decline in turnover during the eligible period of at least 30% compared to the same period in 2019. The calculation of losses will be based on audited accounts or official statutory accounts filed at Companies House, or approved accounts submitted to HMRC which includes information on the applicant's profit and loss;

c. 'Uncovered fixed costs' means fixed costs not otherwise covered by profit, insurance or other subsidies;

d. The grant payment must not exceed 70% of the applicant's uncovered fixed costs, except for micro and small enterprises (for the purposes of this scheme defined as less than 50 employees and less than £9,000,000 of annual turnover and/or annual balance sheet), where the grant payment must not exceed 90% of the uncovered fixed costs;

e. Grant payments under this allowance must not exceed £9,000,000 per single economic actor. This allowance includes any grants previously received in accordance with Section 3.12 of the European

Commission's Temporary Framework; all figures used must be gross, that is, before any deduction of tax or other charge;

f. Grants provided under this allowance shall not be cumulated with other subsidies for the same costs.

An applicant must be able to provide the necessary documentation to demonstrate it is eligible for funding under the COVID-19 Business Grant Special Allowance. The Council is required by government to verify that an applicant can meet all the criteria set before awarding grants under the COVID-19 Business Grant Special Allowance.  

The Council acknowledges that this is a complex area. The Council is unable to provide advice regarding the domestic subsidy allowance provision. Any organisation or businesses wishing to claim grants under the COVID-19 Business Grant Special Allowance is encouraged to seek appropriate professional advice before submitting a claim.


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