Coronavirus: business grants update

The government is providing £12.3 billion in extra funding for local authorities to support small businesses through the Small Business Grants Fund and Retail, Hospitality and Leisure Grant Fund. In addition, a new top-up fund of £617m for certain small businesses ineligible for the business grant funds scheme previously, has been announced.

The new top-up grant fund

Qualifying small businesses may be able to apply for up to £25k in grant funding to help them with ongoing, fixed property costs. The allocation of the Fund will be at the discretion of local councils, but priority is expected to be given to businesses in shared work spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts which pay council tax rather than business rates.

Further announcements are expected from the government next week, but the outline details of the scheme are available here: https://www.gov.uk/government/news/top-up-to-local-business-grant-funds-scheme.

The Small Business Grants Fund (SBGF)

The one-off grant, called the Small Business Grants Fund, is available to businesses based in England, which were in receipt of Small Business Rate Relief or Rural Rate Relief as of 11 March 2020, and occupy a property. This grant is currently £10,000 and differs from a loan, as it does not need to be paid back.

The first payments from this scheme were made in April and if your business is eligible, your local council should have written to you. If you haven’t received the grant, but think that you qualify, you should contact your local council urgently.

The Retail, Hospitality and Leisure Grant Fund (RHLGF)

Funding grants of between £10,000 and £25,000 are available for businesses, as part of the Retail, Hospitality and Leisure Grant Fund Scheme and could help businesses in these sectors if they are not eligible under the Small Business Rate Relief or Rural Rate Relief schemes (e.g. because they are not classed as “small” due to having more than one property which exceeds the combined rateable value threshold). Such businesses with a rateable value of under £15,000 will receive a grant of £10,000, whilst those with a rateable value of between £15,001 and £51,000, will receive £25,000.

You are eligible for the grant if:

  • Your business is based in England;
  • Your business is in the retail, hospitality and/or leisure sector.

Properties can benefit from the relief if they are occupied hereditaments that are wholly or mainly being used:

  • as shops, restaurants, cafes, bars, pubs, cinemas and live music venues;
  • for assembly and leisure (for example sports clubs, gyms and spas);
  • as hotels, guest and boarding premises and self-catering accommodation.

As per the Small Business Grants Fund, any money your business receives through the RHLGF does not have to be repaid.

Pubs

In the March Budget, it was announced that “pubs relief” would increase by £1000 to £5,000 for pubs with a rateable value below £100,000 (subject to eligibility). Following Covid-19, if your pub has a rateable value of less than £51,000, you should be entitled to claim the full 100% retail discount on your 2020/21 business rates bill.

In this case, the business may not be able to also claim the £5,000 “pub relief”, as its net business rates bill for 2020/21 will be zero after the 100% retail discount is deducted; i.e. we do not think at this stage that you can claim an additional £5,000 refund. However, you will be eligible for the one-off grant (as detailed above).

How to apply

If your business qualifies for Small Business Rates Relief or Rural Rates Relief, your local authority should have written to you about the Small Business Grants Fund (SBGF); however, it’s possible that they haven’t notified you about the Retail Hospitality and Leisure Grant Fund (RHLGF), depending on your circumstances.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to your relevant local authority as soon as possible.

After you’ve received your grant

For accounting purposes, any payments received through the SBGF or RHLGF, or indeed any other Coronavirus grant scheme, should be recorded as taxable income and not offset against corresponding costs.

We recommend setting up a new nominal code and calling it ‘Grant Income’. Any grant payments you receive can then be posted to this code. For annual accounts, grant payments should be categorised as ‘other income.’

Lastly, it’s important to remember that grant income is outside the scope of VAT, so it doesn't need to included in your VAT return.

Source (as at 1 May): https://www.gov.uk/government/publications/coronavirus-covid-19-business-support-grant-funding-guidance-for-businesses

For further information or advice on any of the issues raised, or for help with services like bookkeeping, cash flow management or payroll during the Coronavirus pandemic, please call us on 01225 325580, email info@richardsonswift.co.uk, or contact your usual client director.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (5 May 2020), however, the government response to the Coronavirus situation is changing 24-7, so it should not be relied upon completely.