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State Aid and Subsidy Allowances

There are limits to the financial support individual businesses can receive from the Government. Covid 19 Business grants need to be considered against these limits.

This was previously known as State Aid and arose from the European Union competition rules which prohibit the Government awarding State Aid to businesses because it can distort competition, which is harmful to consumers and companies in the European Union.

The EU State aid rules no longer apply to subsidies granted in the UK following their withdrawal from the EU and the end of the transition period, which ended on 31 December 2020. However, these have been replaced by a series of subsidy allowance schemes.

Details of the allowances are shown in the table below. You can find further information here.

Subsidy Allowances summary
Subsidy Allowance Eligibility period Details
De Minimis €200,000 1 August 2020 – 7 December 2020 The De Minimis threshold applied over a three fiscal year period. 
COVID-19 Temporary Framework €800,000 1 August 2020 – 7 December 2020

When the De minimis limit was reached, the COVID-19 Temporary Framework allowed payments up to €800,000. This could be combined with the De Minimis aid to bring the per company aid to €1,000,000.

Amended COVID-19 Temporary Framework €4,000,000 8 December 2020 – 3 March 2021 

If a business had reached its limit for aid under the De Minimis and COVID-19 Temporary framework, then it could apply for the amended COVID-19 Temporary framework.

Small Amounts of Financial Assistance Allowance (SAFA)  325,000 Special Drawing Rights – equivalent to approximately £335,000 as of 2 March 2021 4 March 2021 onwards

This allowance is to a single economic actor over any period of three fiscal years.

The precise amount can be accessed via the Special Drawing Right calculator External Hyperlink.
COVID-19 Business Grant Allowance £1,600,000 4 March 2021 onwards

Where the SAFA limit has been reached businesses can utilise the COVID-19 Business Grant Allowance for additional funding. This may be combined with the Small Amounts of Financial Assistance Allowance to equal £1,935,000.

*Businesses can access the COVID-19 Business Grant Allowance and not utilise the SAFA limits at all. They may choose this option if they want to utilise SAFA for other purposes or future subsidy.

COVID-19 Business Grant Special Allowance £9,000,000 4 March 2021 onwards Where the SAFA and COVID-19 Business Grant Allowance limits have been reached businesses can utilise the COVID-19 Business Grant Special Allowance to access further grant funding. 

State Aid

Although the United Kingdom left the European Union on 31 January 2020, under the terms of the Withdrawal Agreement, given effect to through the European Union (Withdrawal) Act 2018, the UK was in a Transition Period until 31 December 2020.

During this Transition Period, the EU State aid rules continue to apply in the UK. Accordingly, any aid granted during the Transition Period must comply with those rules.

There is an exemption that will allow the award of State Aid providing the value is below a "de minimis" level.

The EU state aid rules that applied were as follows: 200,000 Euros received over a three year period which covers the financial year, running from April 2020 to March 2021, and the two preceding financial years, plus 800,000 Euros received over the period March 2020 to December 2020 under the COVID-19 Temporary Framework.

For further information about what constitutes state aid, visit the GOV.UK website External Hyperlink.

Subsidy Allowances

On Thursday 4 March 2021 new subsidy allowances (previously state aid) were established for the COVID-19 business grants schemes. The updated scheme rules do not apply retrospectively. The United Kingdom remains bound by its international commitments, including subsidy obligations set out in the Trade and Cooperation Agreement (TCA) with the EU. Guidance explaining the subsidies chapter of the TCA, World Trade Organisation rules on subsidies, and other international commitments can be found on the GOV.UK website External Hyperlink or TCA document can be found on the European Commission website External Hyperlink.

There are three subsidy allowances set out below:

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