What has happened?
The government has released new guidance for local authorities on paying grants to support businesses during the November 5th to 2nd December 2020 national lockdown and periods of local restrictions.
The grants are set to be allocated to individual councils on Friday 13th November; we’ve outlined below what the new scheme entails:
Local Restrictions Support Grants
The Government has announced £1.1bn of funding will go to Local Authorities to support businesses during lockdown.
The grant is now available for businesses required to close under nationalised lockdown measures, currently in force across England. It will be at the discretion of local authorities as to how the money is shared out between businesses, but pubs and bars could be eligible to the following:
- For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks.
- For properties with a rateable value of between £15k to £51k, grants to be £2,000 per month, or £1k per two weeks.
- For properties with a rateable value of £51k or over, grants to be £3k per month, or £1.5k per two weeks.
Local Authorities have stated that Gov advice would be with them by the 6th of November and then they would issue guidance on process via their websites.
The Government talk about rateable premises as hereditaments – this is a premises that you pay business rates on or that you are exempt from paying business rates on because it is under a certain rateable value (£15k or under).
“hereditament means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list”
We have been advised by BEIS and the cabinet office that these grants should be available to the mobile catering sector and we have been assured that a letter of support for our sector and the wider events sector will accompany the advice to local authorities.
The Discretionary Grant Fund supports small and micro businesses that are not eligible for other grant schemes.
This took the form of Tier 3 grants and now relates to national restrictions.
Under the Additional Restrictions Grant, Local Authorities will receive a one off lump sum payment amounting to £20 per head in each eligible Local Authority when LCAL 3 or widespread national restrictions are imposed. Local authorities can use this funding for business support activities. We envisage this will primarily take the form of discretionary grants, but LAs could also use this funding for wider business support activities.
Local authorities have been encouraged to use the Additional Restrictions Grant create a discretionary fund.
The gov.uk website states:
“Local Authorities can determine how much funding to provide to businesses from the ARG funding provided, and exactly which businesses to target. However, we encourage Local Authorities to develop discretionary grant schemes to help those businesses which – while not legally forced to close – are nonetheless severely impacted by the restrictions put in place to control the spread of Covid-19. This could include – for example – businesses which supply the retail, hospitality, and leisure sectors, or businesses in the events sector”.
While the discretionary grants are for England, the other nations will receive an equivalent amount through the Barnett Consequential. In the summer, both the Scottish and Welsh Governments paid lump sums to mobile caterers.
All local authorities are waiting to be issued with Guidance on the Local Restrictions Grant schemes. Please keep checking your Local Authority website for information and we will update our members as soon as more details are available.
The furlough scheme has reopened from November and is set to run until the end of March, meaning the Government will once again cover 80% of salaries up to £2,500 / month and you can choose to top this up – this includes employees who are already on reduced hours.
The furlough scheme, or Job Retention Scheme, subsidises the wages of people who cannot do their jobs, either because their workplace is closed or because there is no longer enough work for them.
As part of the revised scheme, anyone made redundant after 23rd September can be rehired and put back on furlough. The Job Support Scheme – introduced in November as an alternative to the Furlough Scheme – has been put on hold.
To get signed up to the furlough scheme, speak with your accountant or the person doing the payroll at your business.
Self-Employment Income Support Scheme
The government announced on 2nd November that the Self-Employment Income Support Scheme will be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.
Grants are set to be paid faster than previously, with the window for claims being brought forward from 14th December to 30th November.
The changes will ensure that self-employed individuals who temporarily cannot carry out their business or have suffered reduced demand due to the outbreak are supported over winter.
To be eligible for the grant extension self-employed individuals, including members of partnerships, must:
- have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
- declare that they intend to continue to trade and either:
- are currently actively trading but are impacted by reduced demand due to coronavirus
- were previously trading but are temporarily unable to do so due to coronavirus
The extension will last for 6 months, from November 2020 to April 2021. Grants will be paid in 2 lump sum instalments each covering a 3-month period.
The third grant will cover a 3-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%.
The online service for the next grant will be available from 30 November 2020. HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.
Applying for grants
We encourage Local Authorities to develop discretionary grant schemes to help those businesses which – while not legally forced to close – are nonetheless severely impacted by the restrictions put in place to control the spread of Covid-19. This could include – for example – businesses which supply the retail, hospitality, and leisure sectors, or businesses in the events sector.
Local Authorities may also choose to help businesses outside the business rates system, which are effectively forced to close – for example market traders. Finally, Local Authorities could use ARG funding to provide additional support to larger local businesses which are important to the local economy, on top of the funding provided to those businesses via the LRSG (Closed) scheme, with due reference to State Aid.
Councils have been advised to set up discretionary grant funds for those severely impacted by Covid-19 and so businesses have a right to contact their local authority and list how they’ve been affected. When applying for grants, businesses need to say that they are outside the rate paying system but have been unbale to trade since (date) and their income has been reduced by (figure).
Want more information?
Andrew James from The Catering Accounting Company will be joining us in the studio on Tuesday 17th November to talk you through all of the latest financial support measures put in place for businesses. Tune in on Tuesday at 2pm on Facebook or YouTube.