New UK small business assistance for COVID-19 second wave

5 min read

In the wake of fresh COVID-19 restrictions, businesses that have been forced to shut between November 5 and December 2 will likely be eligible for further government assistance.

There are new grants and assistance being made available for small businesses in England to support and help them survive this new lockdown period. Let’s investigate.

(If you’d like to see the evolution of this assistance, please see our original article on government assistance here.)

Local Restriction Support Grants (Closed)

There’s been a new addition to UK government assistance for small businesses. The new grant is due to recent restrictions that may have forced small businesses to shut down trade and is called the Local Restrictions Support Grant (LRSG [Closed] Addendum).

The LRSG (Closed) provides cash assistance to businesses that have been forced to shut due to the new national restrictions that are currently in force between November 5 and December 2, 2020.

Eligibility for LRSG (Closed)

Your business may be eligible for LRSG (Closed) if:

  • Your business is based in England.
  • Your business occupies property on which it pays business rates.
  • Your business has been required to close specifically due to national restrictions from November 5 to December 2, 2020.
  • Your business has been unable to provide its usual in-person service, from a premise, owing to restrictions.

Eligible businesses can get one grant for each business property.

Businesses excluded

You’re excluded from funding eligibility if:

  • Your business can continue trade during the period of restrictions because you don’t depend on providing direct in-person services from your premises (accountants, for example).
  • You have decided to close your business by choice, even though you’re not required to.
  • Your business has already exceeded the permitted state aid limit (read on for more info).

What if you already receive state aid?

It’s all about the threshold. LRSG counts towards the total ‘de minimis’ state aid your business is allowed to receive. The limit, over a three-year period, is £200,000.

What do you receive?

The rate of LRSG is decide by the ‘rateable value’ of your business property, starting from the first full day of restrictions.

If your business has a property with a rateable value of:

  • £15,000 or less: you may be eligible for a cash grant of £1,334 for each 28-day qualifying restrictions period.
  • £15,000 – £51,000: you may be eligible for a cash grant of £2,000 for each 28-day qualifying restrictions period.
  • £51,000 or above: you may be eligible for a cash grant of £3,000 for each 28-day qualifying restrictions period.

Applying for the grant

If you would like to apply, your local council is responsible for grants. Visit your local council’s website to find out how to apply. Find the website for your local council here.

Local Restriction Support Grants (Open)

If you’ve not been forced to close due to COVID-19 restrictions, yet are experiencing high impacts on your ability to trade, you may also be eligible for LRSG (Open).

Eligible businesses may be entitled to a cash grant from their local council for each 28-day period under local restrictions.

Local councils have the discretion to provide grant funding for businesses under this scheme.

Eligibility

To be eligible for LRSG (Open):

  • Your business must be based in England.
  • Your business hasn’t been forced to close due to restrictions, but has been severely impacted regardless.
  • Your business must operate from an area which has been subjected to ‘High’ or ‘Very High’ local restrictions since August 1, 2020.
  • Your business must have been established and trading before the introduction of Local COVID-19 alert level: ‘High restrictions’.

Businesses excluded

You cannot get funding if:

  • Your business was established after the introduction of local restrictions in your local council area.
  • Your business is in administration or insolvent.
  • You have exceeded the permitted state aid threshold.

What if you already receive state aid?

As above, it’s all about the threshold. LRSG (Open) counts towards the total ‘de minimis’ state aid your business is allowed to receive. The limit, over a three-year period, is £200,000.

Your local council will ask you to complete a declaration which includes confirmation of your current state aid level.

What do you receive?

Local councils are best placed to determine local needs for supporting recovery.

Your local council will use their local knowledge and discretion in determining the level of economic relief provided.

The grant will be based on the rateable value of the property, as with LRSG (Closed) on the date of the start of the local restrictions.

Grants for LRSG (Open) are currently expected to be roughly two-thirds that of LRSG (Closed).

Contact your council to determine actual grant levels. Find the website for your local council here.

Sole trader support extended

If you’re a sole trader looking for support from the government, fortunately there’s further help available with the extension of the Self-Employment Income Support Scheme grant.

This extension arrives in the form of two further grants over three-month periods covering November 2020 to January 2021 and February 2021 to April 2021.

Who is eligible to claim an extension grant?

To be eligible for the grant extension for self-employed individuals:

  • You must have been previously eligible for the Self-Employment Income Support Scheme first and second grant (however, you don’t have to have claimed these).
  • You must have the intention of continuing your trade and:
    • You’re either currently actively trading but are impacted by reduced demand due to COVID-19 or you were previously trading but are temporarily unable to do so due to COVID-19

What does the grant extension entail?

  • The extension will cover six months (from November 2020 to April 2021). Grants will be paid in two instalments, with each covering a three-month period.
  • The third grant (two have already occurred) will cover from November 1, 2020 until January 31, 2021.
  • The government will provide grants calculated at 80% of three months average monthly trading profits, paid out in a single instalment and capped at £7,500.
  • As noted, the government has announced that there will be a fourth grant covering February 2021 to April 2021. Further details are forthcoming.
  • The grants are considered taxable income.

How do you claim the grant extension?

The details around claiming are in the process of being released. There will be an online service for the next grant, available from November 30, 2020. HMRC will be issuing details around the claiming process on GOV.UK in due course.

For further information on UK business support during COVID-19 see here.