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Business rates discounts and reliefs

Subsidy control rules

What is a ‘subsidy’ (formerly referred to as State Aid)?

A subsidy is where a public authority such as a Local Authority provides support to an enterprise that gives them an economic advantage, meaning equivalent support could not have been obtained on commercial terms. This could include, for example, a cash payment, relief on business rates charge, a loan with interest below the market rate or free use of equipment or office space.

Subsidies should only be given if they are in the public interest, to address a market failure or equity concern. However, without proper controls, subsidies can give recipients an unfair advantage over their competitors or be an inefficient use of public money if they do not bring about positive change.

Examples of recent subsidies awarded in Wyre

This has included (but is not exhaustive to):

  • Discretionary Rate Relief
  • COVID-19 Additional Relief
  • BEIS COVID-19 Business Grant Support
  • Retail, Hospitality and Leisure business rate relief

However please note the Extended Retail Discount granted in either 2020/2021 or 2021/2022 does not count as a subsidy.

What are the UK Subsidy Control rules?

On 4 January 2023, the UK’s new subsidy control regime came into force, implementing a new subsidy regulation framework designed for the post-Brexit era. Underpinned by the Subsidy Control Act 2022 (the “Act”), related statutory instruments and government guidance, the new regime aims to grant public authorities the power to design and award subsidies in an agile way while complying with the UK’s international commitments on subsidy control.

How can Local Authorities award a subsidy?

The published guidance document provides the framework for designing and giving subsidies in a way that is consistent with the Subsidy Control Act 2022, to be followed when assessing the grant of a subsidy.

How much subsidy can be awarded?

Firstly it is necessary to establish if the proposed support (known in the Act as ‘financial assistance’) is classed as a subsidy. This can be determined by answering four key questions as explained in the Subsidy Control rules quick guide.

If it is deemed a subsidy it can be applied under the following:

Minimal Financial Assistance (MFA)

For smaller value subsidy awards, MFA allows financial assistance of up to a maximum limit of £315,000 to be made to a single enterprise within a rolling period of three financial years (consisting of the current financial year and the two previous financial years), without the need to comply with the majority of the subsidy control requirements.

However, MFA requires a written declaration from the beneficiary confirming that the limit has not been exceeded before the subsidy can be awarded. This effectively mirrors the historic EU De Minimis regime but sets the threshold at a fixed sterling amount and at a significantly higher level than the EU's €200,000.

Service of Public Economic Interest (SPEI)

For essential services provided to the publicSPEI assistance allows public authorities to award low value subsidies without the needing to comply with most of the subsidy control requirements. SPEI allows up to £725,000 of assistance to be awarded within a rolling period of three fiscal years, subject to obtaining a written declaration confirming that the threshold has not been exceeded.

Streamlined Routes

Streamlined Routes (also known as Streamlined Subsidy Schemes) are a type of subsidy scheme made by the UK government for use by any UK public authority.

The purpose of these routes is to enable public authorities to award routine, low risk subsidies in specified areas.

Please note it is the responsibility of the business, to check that it is eligible, and by the very nature of applying for or accepting a subsidy (such as Retail, Hospitality and Leisure Business Relief) you are declaring that the business will not exceed the permitted subsidy allowance threshold. If you have any doubt as to your position, you must seek appropriate advice before applying for or accepting the subsidy as the responsibility lies with the business.

Transparency of Subsidies Awarded by Local Authorities

Local Authorities have a duty to publish details within 3 months of making an award on the Transparency Database. However, awards of £100,000 or less made under MFA or SPEI are exempt from publication.

Access the transparency database.

Prevention of Fraud

It is the applicant’s responsibility to check eligibility, and by the very submission of an application, are declaring that if awarded some form of subsidy that they are complying with and will not exceed the relevant permitted allowance thresholds. Where there is any doubt, it’s advisable to seek professional advice prior to making any submission.

The government and Wyre Borough Council will not tolerate any business falsifying their records or providing false evidence to gain this discount, including claiming support above these thresholds. A ratepayer who falsely applies for any relief or provides false information or makes false representation in order to gain relief may be guilty of fraud under the Fraud Act 2006.