Chancellor Rishi Sunak announced £3,000 cash grants for small businesses affected by COVID-19 in Budget 2020, later bumping the figure up to £10,000 for small businesses and £25,000 for retail, hospitality and leisure businesses. Does your business qualify?
What Funding is the Government Offering to Businesses?
As well as the funding and support being provided by the government with regards to helping people who can’t pay their mortgages and rent, the government is also offering a package of grants and tax holidays to support businesses through the coronavirus pandemic. One announcement that made waves was the decision to offer small businesses thousands in non-repayable cash grants: first £3,000, later rising to £10,000 as the situation became more critical. Yesterday, it unveiled a £25,000 grant for qualifying retail, hospitality and leisure businesses.
What’s essential to know is that these grants are only available to businesses which operate out of non-domestic properties like offices, shops and warehouses. This is because the grants are based on business rates.
Business rates are taxes charged on non-domestic properties such as shops, pubs, warehouses, rental properties and offices. They are the commercial equivalent of council tax. Local councils handle business rates, calculating them based on the commercial value of your property. You will usually receive your annual bill in February or March; this covers the next tax year.
The government has several business rates relief schemes, which vary based on where you are in the UK. In England, these include small business rate relief, which waives business rates when your property has a rateable value of less than £15,000, and rural rates relief, which offers relief to essential businesses in areas with a population of 3,000 or under.
The coronavirus grants are being offered to businesses that are eligible for one of these schemes or fall under the umbrella of retail, hospitality and leisure.
Two special funds have been set up for the grants:
- the Small Business Grants Fund (SBGF)
- the Retail, Hospitality and Leisure Grant Fund (RHLGF)
Which Businesses Are Eligible For The Grants?
In England, the grants are being awarded to:
- Businesses working from properties that have up to a rateable value of up to £15,000 (ie. qualifying for small business rate relief). They will receive £10,000
- Retail, hospitality and leisure businesses with a rateable value of up to £15,000. They will receive £10,000
- Retail, hospitality and leisure businesses with a rateable value between £15,000 and £51,000. They will receive £25,000
- Rural businesses which are the only village shop, post office, pub or petrol station, serve a population below 3,000 and have a rateable value under £8,500 (shops and post offices) or £12,500 (pubs and petrol stations). They will receive £10,000
In cases where more than one of these criteria apply, the business will receive one grant.
Which Businesses Are Not Eligible For Coronavirus Grants?
- Businesses that are not ratepayers won’t receive any funding. Unfortunately, those of us who work from home offices or run online shops from home fall into this category
- Your business must have been operating on 11 March, the day the Budget was announced. This means that businesses that were dissolved or in liquidation by this date are not eligible
- Businesses with a rateable value of £51,000 or over do not qualify for the grants
- Hereditaments that are occupied for personal use, such as beach huts, private stables and moorings, are excluded
- Car parks and parking spaces are also excluded
To avoid fraud, local authorities will be using the records they had at the time of the first announcement on 11 March and ignoring submissions since that date, including changes backdated to before.
How Will The Grants Be Paid? Do I Have to Apply?
There is no need to apply for the grants as local authorities will be using their records to identify eligible businesses. Landlords and management agents are being urged to help councils in identifying the correct ratepayers.
Examples of Coronavirus Grant Eligibility
To help you understand the scheme, we’ve put together some examples of businesses and whether they would receive the grants.
Josh owns an event planning business, which he runs from his own home. He doesn’t have a non-domestic property, so he is not eligible for a grant.
Florence runs her fashion label from a studio. She would pay business rates but her property’s rateable value is under £15,000, so she qualifies for small business rate relief. She will receive the £10,000 grant.
Amit runs his startup from a co-working space. He pays a flat monthly membership fee which includes rent, business rates and bills. He isn’t a ratepayer to the council, so he won’t receive a grant.
Rosa owns a restaurant. Because she works in hospitality, she benefits from the business rates holiday and won’t have to pay rates this year. Her rateable value is £41,000, so she will also receive the £25,000 grant.
Is Funding Being Offered to Freelancers and Business Owners Without Commercial Properties?
On 26 March, Chancellor Rishi Sunak announced his Self-Employed Income Support Scheme, which matches the 80% of monthly income being offered to people in employment. Freelancers and self-employed people will receive at least three months’ support this June based on profits reported in past tax returns. For more details on the scheme, click here.