Eligibility under Subsidy Allowance (formerly referred to as State Aid)
The EU State aid rules no longer apply to subsidies granted in the UK following the end of the transition period, which ended on 31 December 2020. This does not impact the limited circumstances in which State aid rules still apply under the Withdrawal Agreement, specifically Article 10 of the Northern Ireland Protocol.
The United Kingdom remains bound by its international commitments, including subsidy obligations set out in the Trade and Cooperation Agreement (TCA) with the EU.
Small Amounts of Financial Assistance Allowance (SMFAA)
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 325,000 Special Drawing Rights, to a single economic actor over any period of 3 fiscal years, which is the equivalent of £335,000 as of 2 March 2021.
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.
The Special Drawing Right calculator can be used to calculate the exchange rate on the day the subsidy is awarded.
Article 10 of the Northern Ireland Protocol
Grants in scope of Article 10 of the Northern Ireland Protocol remain subject to EU State aid rules, following the end of the Transition Period which ended on 31 December 2020. Article 10 provides that EU State aid rules will continue to apply to the UK in respect of measures which affect trade in goods and electricity between Northern Ireland and the European Union.
This means grants in scope of Article 10 of the Northern Ireland Protocol must comply with the provisions set out in the 4th amendment of the State aid Temporary Framework dated 13 October 2020.
In assessing whether Article 10 may apply, local authorities are directed to Section 7 of the technical BEIS Guidance which covers the practical application of Article 10. Local Authorities applying Article 10 must follow Section 7 of the technical BEIS Guidance.
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 3 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 3 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, were, for the past 2 years -
- the undertaking's book debt to equity ratio has been greater than 7.5
- the undertaking's EBITDA interest coverage ratio has been below 1.0