Additional Short Term Lockdown Grants Available
Rishi Sunak has recently announced that new grants worth up to £1,500 will be available every three weeks to businesses required to close due to local lockdowns or targeted restrictions.
The new grants come as the government locks down areas such as Bolton, which have seen localised spikes in coronavirus and new rules on gatherings over six people. This means the affected businesses in England will be able to claim up to £1,500 per property every three weeks, while smaller businesses can claim a slightly smaller grant of £1,000.
The actual announcement was made in by the chief secretary to the Treasury Steve Barclay, who said: “These grants provide businesses with a safety net as they temporarily close their doors to help save lives in their local areas.” The scheme is currently under trial in Blackburn, Pendle, and Oldham, before rolling out to other local authorities.
Lockdown Grants: How does it work?
The scheme is based the size of the business, which is calculated on the rateable value of its premises. A business classed as small is one with premises with a rateable value less than £51,000 or pays annual rent or mortgage of less than that amount. These businesses will receive £1,000.
All other businesses with a rateable value or mortgage payments of more than £51,000 will receive £1,500. Also, it is worth remembering that all coronavirus related grants should be added to your businesses’ income at the end of the tax year and will be treated as taxable income.
Lockdown Grants: Are there any other conditions?
Yes, there are as unfortunately, the scheme is not designed to support businesses that have closed at a national level, such as nightclubs and theatres, it only applies to businesses affected by local lockdowns or restrictions.
The scheme only applies to businesses in England; however, the government has stated that the devolved administrations in Northern Ireland, Wales and Scotland will receive at least £12.7bn on top of their March Budget settlements to help them with their response to Covid-19 this year, with a clear hint that they should use some of this money for lockdown grants.
Lockdown Grants: Onus on local authorities
Local authorities will distribute the grants to businesses, and they have also been given the authority to implement further eligibility criteria.
These additional grants target businesses on the business rates list, which is why local authorities have also been given an additional 5% top-up amount of support funding to aid other businesses hit by these local restrictions. The grants offered from this discretionary fund are worth up to £1,500. But unlike the scheme based on the rateable value, funding may be less than £1000 in some cases.
Lockdown Grants: The wider picture
These localised grants are the latest in a whole raft of grants and measures announced since the number of coronavirus infections spiked in the UK. Some of these measures have included year-long business rates holiday for 2020-21 and targeted support for specific sectors such as the VAT cut for the hospitality sector, and further grants to enable businesses to access specialist professional advice.
The latest grant reflects the government’s current approach to managing the virus by putting in place local restrictions. The most recent example of an area which has undergone these restrictions is Bolton, but since August areas such as Northampton, Leicester and Luton have all faced targeted action.
This new lockdown grant is one of the first government schemes to respond to local lockdowns. Backbench MP’s and business leaders have urged the government to offer more support to help during these targeted restrictions, with calls for an extension to the furlough scheme in these areas.
Business Secretary Alok Sharma said, “No business should be punished for doing the right thing, which is why the new package of lockdown and other grants will offer additional breathing space for businesses that have had to temporarily close to control the virus”.
Lockdown Grants:
Tax Accountant’s Opinion
David Jones Tax Accountant
My view is that this latest measure will be warmly welcomed, but is it enough? UK plc will be standing on a cliff edge when the furlough and SEISS support finishes at the end of October and I would be amazed if Rishi doesn’t have yet another rabbit to pull out of his hat in a few weeks’ time.
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.