On 2 May, the government announced that a further £617 million would be made available to local authorities in England to provide a “top up” to the original local business grant fund scheme
How much funding will be provided to business?
Local authorities may disburse grants to the value of £25,000, £10,000 or any amount under £10,000. The value of the payment to be made to a business is at the discretion of the local authority.
In taking decisions on the appropriate level of grant, local authorities may take into account the level of fixed costs faced by the business in question, the number of employees, whether businesses have had to close completely and are unable to trade online and the resulting impact of COVID-19 losses.
Who will benefit from these schemes?
These grants are predominantly aimed at:
- Small and micro businesses (under 50 employees)
- Businesses with relatively high ongoing fixed property-related costs
- Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis
- Businesses which occupy property, or part of a property, with a rateable value, annual rent or annual mortgage payments below £51,000.
The government are asking local authorities to prioritise the following types of business:
- Businesses in shared spaces
- Regular market traders
- Small charities operating from properties which meet the criteria for Small Business Rates Relief
- Bed and breakfast businesses paying council tax rather than business rates
- Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.
- This grant funding is for businesses that are not eligible for other support schemes. Businesses which have received cash grants from any central government COVID-19 related scheme are ineligible for funding from the Discretionary Grants Fund. Such grant schemes include but are not limited to:
– Small Business Grant Fund
– Retail, Hospitality and Leisure Grant
– The Dairy Hardship Fund
- Businesses who have applied for the Coronavirus Job Retention Scheme and Self Employment Income Support Scheme are eligible
- Businesses trading on or before 11 March 2020 are eligible
- Companies that are in administration, are insolvent or where a striking-off notice has been made are not eligible
Who will receive the funding?
Local authorities will run an application process as the potential beneficiaries are unlikely to be known directly by the local authorities.
Local authorities will use their discretion in identifying the right person to receive this funding, based on their application process. The local authority will call or write to the business, stating that by accepting the grant payment, the business confirms that they are eligible for the grant scheme.
Will these grants schemes be subject to tax?
Grant income received by a business is taxable, therefore grants received under the Local Authority Discretionary Grants Fund will be subject to tax.
Further guidance will be issued on each local authority’s website in due course; we will publish details once they are available.