I am already in receipt of the Small Business Rate Relief, which grant is best suited to me?

All businesses in England in receipt of either small business rates relief (SBRR) or rural rates relief (RRR) in the business rates system will be eligible for a grant of £10,000.

Hereditaments included in this scheme are those which on the 11 March 2020 were eligible for relief, including those with a rateable value between £12,000 and £15,000 which receive tapered relief.

I work in the hospitality sector and I understand I may be eligible for funding, which grant should I use?

Grants are generally considered to be a taxable form of income, they can be the taxed the same as any other forms of income, such as money earned through trade, via Corporation Tax.

Where a grant is for expenditure that appears in your profit and loss account and you can defer the grant income, such as through the acquisition of a fixed asset, then you may not have a tax liability on the income as it will be matched with its intended expenditure (i.e. expenditure will cancel out income in your accounts).

In the case of the latest Government COVID-19 grants, it is most likely that you will have to pay Corporation Tax as they are not linked to the acquisition of an asset and cannot be deferred. It is therefore important that you account for this income accurately so that you pay the correct amount of tax in future.

I am not eligible for either grant, can I access support any other way?

The Government has made additional financial support available to the UK’s smaller business owners, who may have been excluded from existing schemes, via the creation of Local Authority Discretionary Grants.

More than £617 million has been made available to councils and local authorities, which will have the discretion to offer funding to:

  • Small and micro businesses, as defined in Section 33 Part 2 of the Small Business, Enterprise and Employment Act 2015 and the Companies Act 2006.
  • 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 a property, or part of a property, with a rateable value or annual rent or annual mortgage payments below £51,000.

Local authorities have been asked by the Government to prioritise grants to businesses that shared operate out of shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates.

Local authorities have also been given discretionary powers to make payments to other businesses based on local economic need. A decision on who will receive funding will be down to the discretion of each local authority.

To be eligible a business must be small (under 50 employees) and be able to demonstrate that they have experienced a significant drop in income as a result of the COVID-19 pandemic restriction measures.

These include grants of £25,000, £10,000 and small grants of under £10,000 that can be made at the discretion of local authorities.

So far more than 614,000 business properties have benefitted from the grant funding schemes – receiving more than £7.5 billion.

It is hoped that those who missed out on initial grants will be supported by this latest change to the rules. Further details of the scheme are expected shortly.

How is income from grants taxed?

Grant income is outside the scope of VAT, therefore no VAT is payable when you receive a grant, but you may be able to reclaim VAT from any asset paid for via a grant, as long as it is within the ‘normal’ VAT rules.

Is grant income subject to VAT?

Grant income is outside the scope of VAT, therefore no VAT is payable when you receive a grant, but you may be able to reclaim VAT from any asset paid for via a grant, as long as it is within the ‘normal’ VAT rules.

Can charities apply for these grants?

Charities that otherwise would meet the necessary criteria, but whose bill for 11 March was reduced to nil by a local discretionary award are still eligible for the RHLG, according to the guidance.

Are there any businesses that are excluded from grant funding?

Hereditaments that are occupied for personal use, such as private stables, beach huts, moorings, car parks and parking spaces are excluded from both schemes.

Additionally, businesses that were in liquation or were dissolved as of the 11 March cannot apply for either scheme.

How do I apply for support via these grant funds?

Neither scheme has a mandatory application process. Instead, businesses should be contacted by their local authorities who will outline how they can claim a grant.

In some cases, where a business has an existing direct debit to pay business rates, local authorities can handle the application automatically or they may request additional details via an online form.

If you are not contacted by your local authority and believe you are eligible, we recommend that you speak to the relevant officer at your council to find out how the funding is being delivered.

I am renting a space in a building but my landlord pays my rates through the rent. Am I eligible for grants?

The grants are given to the ratepayer, who would presumably be the landlord in this case. Unless the rateable value of the hereditament is less than £15,000 (in England) the landlord would not qualify for the grant. The landlord would, in any case, need to decide whether to pass on any grants received.

Are there any new grants for local lockdowns in Tier 2 (High-Alert)?

Local Restrictions Support Grant (Tier 2) will be made available for businesses in the hospitality, hotel, B&B, and leisure sectors in areas subject to Tier 2 (High Risk) restrictions.

The grants are intended to provide an amount equivalent to 70 per cent of the grants available to businesses that are legally required to close.

The Government suggests that they will be distributed as follows:

  • Rateable value of £15,000 or below will receive £934 per month;
  • Rateable value of between £15,000 and £51,000 will receive £1,400 per month;
  • Rateable values of £51,000 and above will receive £2,100 per month.

However, local authorities will have discretion to determine the precise grant awarded to each business.

Local authorities will also receive a five per cent top-up to provide support to businesses not in the business rates system.

Businesses in areas that were subject to restrictions prior to the introduction of tiering system will be able to apply for grants retrospectively to the start of restrictions in their area.

Are there any new grants for local lockdowns in Tier 3 (Very-High Alert)?

the Government will also increase the value of cash grants offered to businesses in England forced into lockdown to support them with fixed costs.

Linked to the rateable value of business premises, the increased grants will see payments of up to £3,000 per month, payable every two weeks, instead of up to £1,500 every three weeks.

Under this reformed grant scheme:

  • Small businesses with a rateable value of or below £15,000 can now claim £1,300 per month; 
  • medium-sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month; and 
  • larger businesses can claim £3,000.

The Government is also extending this scheme to include businesses that are forced to close on a national basis, such as nightclubs.