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Business Rates - Subsidy Control

What is a Subsidy?

A subsidy refers to a grant, a tax relief, 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 View subsidies awarded by UK government page of the GOV.UK website.

The new statutory subsidy control regime replaced EU state aid rules, which applied in the UK until the end of the transition period in December 2020 and the Trade and Cooperation Agreement (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 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 are 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 on the UK’s international subsidy control commitments page on the GOV.UK website which explains the subsidies chapter of the UK-EU Trade and 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, so long as 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.

When considering an application for Discretionary Rate Relief we need to know if you or any company in your group of businesses has received Subsidy or if you expect to receive any Subsidy in the current financial year or the previous two financial years.

A business which receives any reliefs or grants from Sefton MBC must agree to inform the Council if they are in breach of the above allowances. Any business which received relief or grants should keep necessary documentation to evidence this.

The Government and Sefton MBC will not tolerate any business falsifying their records or providing false evidence to gain support awards, including claiming support above these thresholds. A person and/or business that falsely applies for any relief or provides false information or makes false representation in order to gain support may be guilty of fraud under the Fraud Act 2006.

You can complete a Subsidy Control Declaration form online.


Last Updated on Wednesday, April 24, 2024

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