Subsidy Allowance applicable to COVID-19 Business Grant Support Applications

On Thursday 4 March 2021, the government introduced new subsidy allowances for COVID-19 business grants schemes, on the basis of the principles set out in Article 3.4 of the TCA.

The government revised these allowances in December 2021 in relation to the announcement of additional economic support to help businesses who have been most impacted by the Omicron variant.

Subsidy Allowance – Applicable to COVID-19 business grant applications submitted from 1 January 2022 onwards

There are three subsidy allowances for the COVID-19 Business Grant Schemes set out below: Small Amounts of Financial Assistance Allowance, the COVID-19 Business Grant Allowance and the COVID-19 Business Grant Special Allowance.

These apply to the Omicron Hospitality and Leisure Grant

  • Small Amounts of Financial Assistance Allowance - Grants may be paid in accordance with Article 364(4) of the TCA, which enables an applicant to receive up to a maximum level of subsidy without engaging Chapter 3 of the TCA. This allowance is the equivalent of 325,000 Special Drawing Rights, to a single economic actor over a rolling period of three fiscal years (“the relevant period”) and includes any subsidy previously received as 'de minimis' aid or as Small Amounts of Financial Assistance from any subsidy awarding body.

    On 9 December 2021 this was the equivalent of £343,000, using the Special Drawing Right calculator

An applicant may elect not to receive grants under the Small Amounts of Financial Assistance Allowance and instead receive grants only using the below allowances available under this scheme.

  • COVID-19 Business Grant Allowance - if limits are reached under the Small Amounts of Financial Assistance Allowance, or the applicant elects not to receive grants under the Small Amounts of Financial Assistance Allowance, grants may be paid in compliance with the Principles set out in Article 366 of the TCA and in compliance with Article 364(3) of the TCA under the COVID-19 Business Grant Allowance (subsidies granted on a temporary basis to respond to a national or global economic emergency).

    For the purposes of these scheme rules, this allowance is £1,900,000 per single economic actor. This allowance includes any grants previously received under the COVID-19 business grant schemes and any State aid previously received under Section 3.1 of the European Commission’s Temporary Framework across any other UK scheme.

This may be combined with the Small Amounts of Financial Assistance Allowance to equal to £2,235,000 (subject to the exact amount applicable under the Small Amounts of Financial Assistance Allowance using the Special Drawing Right calculator and any other support an applicant has received under the Small Amounts of Financial Assistance Allowance in the Relevant Period).

  • COVID-19 Business Grant Special Allowance – if limits are reached under the Small Amounts of Financial Assistance Allowance and COVID-19 Business Grant Allowance, an economic actor may be able to access a further allowance of funding of up to £10,000,000 per single economic actor if a series of further conditions are met:
    1. The Special Allowance covers only the applicant’s uncovered fixed costs incurred during the period between 1 March 2020 and the date of the application, including such costs incurred in any part of that period (‘eligible period’);
    2. 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;
    3. ‘Uncovered fixed costs’ means fixed costs not otherwise covered by profit, insurance or other subsidies;
    4. 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;
    5. Grant payments under this allowance must not exceed £10,000,000 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;
    6. Grants provided under this allowance shall not be cumulated with other subsidies for the same costs.

An applicant must submit necessary documentation such as audited accounts and profit and loss statement at the time of application to demonstrate it is eligible for funding under this COVID-19 Business Grant Special Allowance.

For the avoidance of doubt, grants under the Small Amounts of Financial Assistance Allowance, the COVID-19 Business Grant Allowance and the COVID-19 Business Grant Special Allowance may be combined for a potential total allowance of £12,235,000 (taking into account all grants previously received under the COVID-19 business grants schemes and subject to the exact amount applicable under the Small Amounts of Financial Assistance Allowance using the Special Drawing Right calculator). BEIS may vary the terms of these schemes or suspend or close the schemes with immediate effect, without notice and at any time. 

Grants provided in excess of the Small Amounts of Financial Assistance Allowance may not be granted to applicants that were defined as an ‘undertaking in difficulty’ (as defined below) on 31 December 2019. In derogation to the above, grants can be granted to micro or small enterprises (as defined above) that were already in difficulty on 31 December 2019 provided that they are not subject to collective insolvency proceedings.

‘Undertaking in Difficulty’ 

‘Undertaking in difficulty’ means an undertaking in respect of which at least one of the following circumstances occurs:

  1. In the case of a limited liability company (other than an SME that has been in existence for less than three years) where more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital. For the purposes of this provision, ‘share capital’ includes, where relevant, any share premium.
  2. In the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME that has been in existence for less than three years) where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses.
  3. Where the undertaking is subject to collective insolvency proceedings or fulfils the criteria for being placed in collective insolvency proceedings at the request of its creditors.
  4. Where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee or has received restructuring aid and is still subject to a restructuring plan.
  5. In the case of an undertaking that is not an SME, where, for the past two years:
    1. the undertaking's book debt to equity ratio has been greater than 7.5; and
    2. the undertaking's EBITDA interest coverage ratio has been below 1.0.

Further information is available at:

Subsidy Allowance – Applicable to COVID-19 business grant applications submitted from 4 March 2021 to 31 December 2021

new domestic subsidy allowance for COVID-19 business support grants took effect on Thursday 4 March 2021, based on the principles set out in Article 3.4 of the Trade and Cooperation Agreement (TCA) with the EU. These new rules are the replacement for State aid but do not apply retrospectively, the Government has advised that previously state aid rules including limits on the amount of aid granted are to be applied up to 4 March 2021. Applications made prior to 4 March 2021 are subject to the previous state aid / subsidy control limits (see section below Subsidy Control prior to 4 March 2021). 

Under the new domestic subsidy allowance scheme rules for COVID-19 business grants, the maximum level of subsidy that an economic actor, which is defined as an entity or a group of entities constituting a single economic entity regardless of its legal status, that is engaged in an economic activity by offering goods or services on a market, may receive under each level of allowance is set out below.

  • Small Amounts of Financial Assistance Allowance - Grants may be paid in accordance with Article 3.2(4) of the TCA, which enables an applicant to receive up to a maximum level of subsidy without engaging Chapter 3 of the TCA. This allowance is the equivalent of 325,000 Special Drawing Rights, to a single economic actor over any period of three fiscal years and includes any subsidy previously received as 'de minimis' aid or as Small Amounts of Financial Assistance under Article 3.2(4) of the Trade and Co-operation Agreement (TCA) from any subsidy awarding body. As at 2 March 2021 this was the equivalent of £335,000, using the Special Drawing Right calculator

An applicant may elect not to receive grants under the Small Amounts of Financial Assistance Allowance and instead receive grants only using the below allowances available under this scheme.

  • COVID-19 Business Grant Allowance - if limits are reached under the Small Amounts of Financial Assistance Allowance, grants may be paid in compliance with the Principles set out in Article 3.4 of the TCA and in compliance with Article 3.2(3) of the TCA under the COVID-19 Business Grant Allowance (subsidies granted on a temporary basis to respond to a national or global economic emergency). For the purposes of these scheme rules, this allowance is £1,600,000 per single economic actor. This allowance includes any grants previously received under the COVID-19 business grant schemes and any State aid previously received under Section 3.1 of the European Commission’s Temporary Framework across any other UK scheme. This, should the economic actor wish, be combined with the Small Amounts of Financial Assistance Allowance to equal to £1,935,000 (subject to the exact amount applicable under the Small Amounts of Financial Assistance Allowance using the Special Drawing Right calculator).
  • COVID-19 Business Grant Special Allowance – if limits are reached under the Small Amounts of Financial Assistance Allowance and COVID-19 Business Grant Allowance, an economic actor may be able to access a further allowance of funding of up to £9,000,000 per single economic actor if a series of further conditions are met:
    • 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’);
    • 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;
    • ‘Uncovered fixed costs’ means fixed costs not otherwise covered by profit, insurance or other subsidies;
    • 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;19
    • 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;
    • Grants provided under this allowance shall not be cumulated with other subsidies for the same costs.

An applicant must submit accounting evidence such as audited accounts and profit and loss statement at the time of application to demonstrate it is eligible for funding under this COVID-19 Business Grant Special Allowance.

For the avoidance of doubt, grants under the Small Amounts of Financial Assistance Allowance, the COVID-19 Business Grant Allowance and the COVID-19 Business Grant Special Allowance may be combined for a potential total allowance of £10,935,000 (taking into account all grants previously received under the COVID-19 business grants schemes and subject to the exact amount applicable under the Small Amounts of Financial Assistance Allowance using the Special Drawing Right calculator). BEIS may vary the terms of these schemes or suspend or close the schemes with immediate effect, without notice and at any time. 

Grants provided in excess of the Small Amounts of Financial Assistance Allowance may not be granted to applicants that were defined as an ‘undertaking in difficulty’ (as defined below) on 31 December 2019. In derogation to the above, grants can be granted to micro or small enterprises (as defined above) that were already in difficulty on 31 December 2019 provided that they are not subject to collective insolvency proceedings.

‘Undertaking in Difficulty’ 

‘Undertaking in difficulty’ means an undertaking in respect of which at least one of the following circumstances occurs:

  • In the case of a limited liability company (other than an SME that has been in existence for less than three years) where more than half of its  subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital. For the purposes of this provision, ‘share capital’ includes, where relevant, any share premium.
  • In the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME that has been in existence for less than three years) where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses.
  • Where the undertaking is subject to collective insolvency proceedings or fulfils the criteria for being placed in collective insolvency proceedings at the request of its creditors.
  • Where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee or has received restructuring aid and is still subject to a restructuring plan.
  • In the case of an undertaking that is not an SME, where, for the past two years:
    • the undertaking's book debt to equity ratio has been greater than 7.5; and
    • the undertaking's EBITDA interest coverage ratio has been below 1.0.

Further information is available at:

Subsidy Control – Applicable to COVID-19 business grant applications submitted 8 December 2020 to 3 March 2021

The UK left the EU on 31 January 2020, nonetheless under the Withdrawal Agreement the State aid rules continued to apply during the transition period, subject to regulation by the EU Commission. The Local Authority must be satisfied that all State aid requirements have been fully met and complied with when making grant payments, including, where required, compliance with all relevant conditions of the EU State aid de minimis regulation, the EU Commission Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, the approved COVID-19 Temporary Framework for UK Authorities, and any relevant reporting requirements to the EU Commission.

For the avoidance of doubt, the TCA enables Local Authorities to still pay out subsidies under previously approved State Aid schemes, as these will be in line with the principles set out in the TCA. This includes subsidies related to COVID-19 that have previously been given under the Temporary Framework. However, any award must comply with the rules and guidance governing for COVID-19 relief under the COVID-19 Temporary Framework measure for the UK.

More information on subsidy controls are available at GOV.UK.

COVID-19 grant payments such as Local Restrictions Support Grant and the Additional Restrictions Grant can be provided under the existing de minimis rules, to any one organisation over a three fiscal year period, provided doing so does not exceed the €200,000 threshold.

Payments made where the de minimis threshold has been reached may be paid under section 3.1 of the COVID-19 Temporary Framework for UK authorities. The amended Temporary Framework enables EU Member States to give up to the nominal value of €800,000 per company. This can be combined also with so-called 'de minimis' aid (to bring the aid per company up to €1 million) and with other specific types of aid.

This can be converted into pounds using the appropriate exchange rate published monthly by the European Commission.

Any business that has reached these limits may only receive further grant funding if the conditions set out in Section 3.12 of the amended European Commission Temporary Framework (Fourth Amendment) are met. This new measure was incorporated into the COVID-19 Temporary Framework for UK authorities on Tuesday 8 December 2020.

A business to be granted aid under Section 3.12 of the Temporary Framework for UK authorities must meet the following conditions:

  • The aid covers “uncovered fixed costs” which have been incurred during the period between 1 March 2020 and 31 December 2020. These are defined as costs which are not covered by the profit made by an organisation between 1 March and 31 December 2020, and have not been covered by other sources, such as insurance, other aid, or support from other sources (as set out in paragraph 87c of the amended European Commission Temporary Framework (Fourth Amendment).
  • The organisation has suffered a decline in turnover 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 businesses profit and loss.
  • The aid must not exceed 70% of the undertaking’s uncovered fixed costs, except for micro and small enterprises (within the meaning of Annex I of the General Block Exemption Regulation) where the aid must not exceed 90% of the uncovered fixed costs.
  • The overall aid to an undertaking under this measure must not exceed €3 million per undertaking; all figures used must be gross, that is, before any deduction of tax or other charge.
  • Aid under this measure may not be granted to undertakings that were already in difficulty (within the meaning of the General Block Exemption Regulation4) on 31 December 2019.
  • The aid under this measure cannot be cumulated with other aid for the same eligible costs
  • The aid is granted before 30 June 2021.

Further Information is available at:

State Aid  – Applicable to COVID-19 business grant applications submitted 1 August 2020 to 7 December 2020

  • Payments could be provided under De Minimus rules to any one organisation over a three fiscal year period, provided doing so did not exceed the €200,000 De Minimus threshold.
  • When the De Minimus limit was reached, the COVID-19 Temporary Framework for UK Authorities enabled payments to be made up to the nominal value of €800,000 per company.
  • This could be combined with the De Minimus aid to bring the aid per company to up to €1,000,000 and with other specific types of aid.
  • Applicants were asked to self-declare through the application process to confirm understanding and compliance with these permitted thresholds.  

What information do I need to supply to be granted aid in line with the updated COVID-19 business grants subsidy allowance(s)?

It is your company’s responsibility to check that it is eligible, and by the very submission of an application you are declaring that if awarded payment that you are complying with and will not exceed the relevant permitted allowance thresholds. If you have any doubt as to your position you must seek appropriate advice before applying as the responsibility lies with the business.

When submitting your application for a COVID-19 related grant support we will ask you to confirm, if you are applying for this grant aid under one or more of the new subsidy allowance thresholds. If you are applying under the COVID-19 Business Grant Allowance and / or the COVID-19 Business Grant Special Allowance you will need to provide information on the subsidies already received by the economic actor.

A Salford City Council business template for declaring subsidies received can be downloaded from the bottom of this page which is based on the template provided by government. This can be uploaded at the time of application, or we may ask you for this information whilst processing your application, should our due diligence checks highlight that you have exceeded the Small Amounts of Financial Assistance Allowance.

If you are applying under the COVID-19 Business Grant Special Allowance, in addition to submitting the business template for declaring subsidies received you must also submit at the same time additional accounting evidence. This should be a copy of your audited accounts or official statutory accounts filed at Companies House, or approved accounts submitted to HMRC, plus a profit and loss statement. This is to demonstrate you meet the conditions for this allowance, namely highlighting your uncovered fixed costs incurred during the eligible period and a decline in turnover of at least 30% again during the eligible period compared to the same period in 2019. For the purposes of COVID-19 grant support the eligible period is 1 March 2020 to date of application. Further details on the accounting evidence required can be found in Annex 1 of the Salford City Council business template which can be downloaded from the bottom of this page.

You must also declare that you were not an undertaking in difficulty on 31 December 2019 and are not in administration, insolvent or subject to a striking-off notice.

The Local Authority is reliant on you to provide correct and timely information on what subsidies (including those previously referred to as ‘State Aid’) your company has received. Therefore, it is very important that you take care to ensure that the information provided to the local authority is accurate and up to date, particularly if your company may be coming close to the allowance thresholds.

If your company has accepted COVID-19 aid from the local authority which has caused your organisation to exceed the new domestic subsidy allowances, the local authority shall be entitled to recover any such payments from you.

Further guidance has been published on the GOV.UK website.

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