COVID-19 Government support for hospitality

The Coronavirus Job Retention Scheme, also known as the furlough scheme, has been extended to 30th April 2021. Details about the extension are available here.

Check to find:

• Which employees you can put on furlough to use the CJRS
• If you can claim for your employees’ wages using the CJRS
• What steps you need to take before calculating your claim
• Find out how much you can claim
• For information on claiming for wages through the scheme click here

The furlough scheme (CJRS) has been extended until the end of April 2021.  The level of the grant will mirror the levels available under the CJRS in August, so the Government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.

Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only need to cover National Insurance and employer pension contributions.

To be eligible to be claimed for under this extension, employees must have been on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30^th October 2020.

Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (if other eligibility criteria are met).  Employees employed as of 23^rd September (day of Job Support Scheme Announcement) and notified to HMRC by RTI on or before that date, who have since been made redundant can be rehired and placed on the CJRS.

As with the previous CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.

These grants are aimed at hospitality and leisure businesses and have been established as LRSG (Open) and (LRSG (Closed). In light of the announcement of a lockdown in England from 5^th November it has been confirmed that backdated cash grants for businesses in Tier 2/3 areas – businesses in hospitality, leisure and accommodation sectors that have been suffering from reduced demand for a while – will receive backdated grants at 70% of the value of closed grants up to a maximum of £2,100 per four weeks for this period. On the 12th of November the Secretary of State for Business confirmed that monies had been issued to Local Authorities.

Guidance on Local Restrictions Support Grants (LRSG) and Additional Restrictions Grant (ARG) has been issued to Local Authorities by the Government. This sets out the criteria that Local Authorities should apply – it can be found here.

During the second national lockdown in England, the Local Restrictions Support Grant (Open) ceased to apply, and (Closed) was superseded by the conditions set out in this addendum. Equally, in the third national lockdown and any areas in Tier 4 that preceded it, the conditions in this addendum apply. Businesses will not be eligible for multiple versions of the Local Restrictions Support Grants under widespread national restrictions. Local Authorities (LAs) who triggered the Local Restrictions Support Grant (Open) between 1^st August and 4^th November will still receive their payments for that period.

The Local Restrictions Support Grant (Closed) will move from a 14-day payment cycle to an alternative payment cycle. For 5^th November – 2^nd December inclusive, a 28-day payment cycle will be applied. Grant funding will be issued to Local Authorities at the beginning of the 28-day payment cycle, which is the first day widespread restrictions come into force nationwide.

Businesses that are eligible are those that have been mandated to close by Government.

• Businesses that are open in COVID alert level “high” areas (Tier 2) and “very high” (Tier 3): Open businesses which are experiencing considerable difficulty will be entitled to local authority grant funding from LRSG (Open) as follows:
  • For properties with a rateable value of £15,000 or under, grants of £934 per month.
  • For properties with a rateable value above £15,000 and below £51,000, grants of £1,400 per month.
  • For properties with a rateable value of £51,000 and above, grants of £2,100 per month.
  • These grants will be available retrospectively for areas who have already been subject to local restrictions.

The funding local authorities will receive will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area, and will assume that these businesses receive grants equivalent to 70% of the grants for which legally closed businesses are eligible.

These grants are aimed at hospitality, hotel, bed & breakfast and leisure businesses.

It will be up to Local Authorities to determine what precise funding to allocate to each business – the above levels are only an approximate guide.

Local authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which may not be in the business rates system.

A factsheet for Tier 2 grants is available here.

• Businesses mandated to close in COVID alert level “very high” areas (Tier 3): Businesses that are legally required to close will be entitled to local authority grant funding from LRSG (Closed) as follows:
  • Properties with a rateable value of £15,000 or under will receive grants of £667 per two weeks of closure (£1,334 per month).
  • Properties with a rateable value of above £15,000 and below £51,000, grants of £1,000 per two weeks of closure (£2,000 per month).
  • Properties with a rateable value of £51,000 or over will receive grants of £1,500 per two weeks of closure (£3,000 per month).

Each local authority will also receive 5% discretionary “top up” funding, though the eligibility criteria for this remains unconfirmed.

We have drafted template letters for members to send to their local authority and local representatives if grant funding is slow to be issued, the template for local authorities can be downloaded here, and the template for local Members of Parliament can be downloaded here.

The third national Lockdown for England started on 5^th January 2021. Hospitality businesses will be closed until at least February half-term (a review will take place in the week commencing the 15^th February).

A new set of one-off grants have been announced to support hospitality, retail and leisure businesses to help them “through to the Spring”. (It is not clear what period these one-off grants are meant to cover other than that statement.}

This latest package of support will be comprised of one-off top up payments of:

• £4,000 for businesses with a rateable value of £15,000 or under
• £6,000 for businesses with a rateable value between £15,000 and £51,000
• £9,000 for businesses with a rateable value of over £51,000

These payments will be made through local authorities and will be in addition to the Local Restrictions Support Grants already in place. We understand that funds will be made available to local authorities in the w/c 11^th January, with authorities encouraged to pay out grants as soon as possible. There will also be money made available for the Scottish, Welsh and Northern Irish Governments as well, though it is not immediately clear whether this is new money for the devolved administrations or not – we are seeking clarity on this.

We have asked BEIS to clarify any State Aid considerations in relation to these additional grants.

An additional £594m of funding is being made available to local authorities for businesses not eligible for the above grants, but nonetheless impacted by the restrictions – businesses should contact their local authorities regarding this fund. In particular, breweries may be able to apply for these funds.

We are expecting fuller guidance to be published by Government by 8^th January.

Areas that were placed into Tier 3 were provided with additional funding to support their local businesses. These funds were based upon each affected area, and it is the Local Authority that decides how to use these funds, e.g. if they set up their own grant scheme to support targeted businesses.

The Government has announced an uplift in the claims that can be made under SEISS for November 2020 to January 2021. Details are here.

It has increased support under the third instalment of the UK-wide Self-Employment Income Support Scheme, with people receiving 80% of average trading profits for three months from November to January. Grants will also be paid faster than previously planned – with the claims window opening at the end of November rather than the middle of December.

SEISS grants are calculated over three months, the uplift for November to January means that the maximum grant will increase to £7,500.

The extension will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period. More information is available here.

The application deadline for the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and Coronavirus Large Business Interruption Loan Scheme is being extended until the end of March 2021.  The schemes had been previously due to close to applications on 30^th November 2020.

The Treasury also announced that rules of the Bounce Back Loan Scheme will be adjusted to allow those businesses who have borrowed less than their maximum (i.e. less than 25% of their turnover) to top-up their existing loan. Businesses will be able to take-up this option from the week commencing 9^th November and they can make use of this option once.

A special one-off payment of £1,000 for wet-led pubs in England was announced in December. The Government has published its guidance for Local Authorities on eligibility and payment of the £1,000 Christmas Support Payment (CSP) grant for wet-led pubs.  The full guidance is available here.

Key points from the guidance are noted below:

• For the purposes of this grant, a wet-led pub is defined as a pub that derives less than 50% of its income from sales of food.
• For the purposes of this grant, pubs should under normal circumstances (without local or national restrictions) be described as: open to the general public, allow free entry other than when occasional entertainment is provided, allow drinking without requiring food to be consumed and permit drinks to be purchased at a bar.
• Businesses that are also in receipt of other Local Restrictions Support Grants – for example LRSG (Closed) or Additional Restrictions Grant – can also receive this grant.
• Local Authorities under Tier 2 or Tier 3 restrictions for all or part of the period between 2 and 29 December 2020 will pay a £1,000 flat-rate grant to wet-led pubs.
• Eligible wet-led pubs will be invited to apply to receive the grant through their Local Authority.
• As part of their application process for the scheme, all pubs will be required to self-certify that they meet all eligibility criteria.
• Local Authorities may request that pubs provide accounting evidence that they derive under 50% of their income from food sales to determine that the pub is wet-led. These accounts should be dated no later than 11 March 2020 (covering a period when trade was not affected by Covid-19)
• Businesses established after 11 March 2020 and before 1 December will still be eligible for this grant and may be asked to supply accounting evidence that they derive under 50% of their income from food sales covering the period that they have been open.
• This scheme will close on 29 December 2020. Final applications must be received by Local Authorities by 31 January 2021. It is expected that Local Authorities will provide local businesses with grant funding as soon as possible and no later than 28 February 2021.
• Businesses must have been trading on 30 November (the day before this scheme was announced) to be eligible to receive funding under this scheme. Where local restrictions are preceded by national ‘lockdown’ measures, requiring the closure of businesses that are otherwise eligible, it is accepted that those businesses are still trading.
• The Local Authority must call or write to the business, stating that by accepting the grant payment, the business confirms that they are eligible for the grant scheme. This includes where Local Authorities already have bank details for businesses and are in a position to send out funding immediately, or where the Local Authority is sending a cheque to a business.

Key exclusions for the grant

• Businesses in areas moving from Tier 1 to Tier 2 or Tier 3 after 29 December will not be eligible to receive funding.
• Pubs that derive over 50% of their income from food sales will not be eligible to receive funding through this grant scheme.
• For the purposes of the grant scheme, the definition of a pub excludes: restaurants, cafes, nightclubs, hotels, snack bars, guesthouses, boarding houses, sporting venues, music venues, festival sites, theatres, museums, exhibition halls, cinemas, concert halls and casinos.
• Businesses that have already received grant payments that equal the maximum levels of State aid permitted under the de minimis, the Covid-19 Temporary State Aid Framework and all other UK schemes under the terms of the European Commission’s Temporary Framework will not be eligible to receive funding. There is more info on state aid on page 11 of the guidance.
• Businesses that are in administration, insolvent or where a striking-off notice has been made, are not eligible for funding under this scheme.
• The CSP grant will need to be included as income in the tax return of the business but only businesses that make an overall profit once grant income is included will be subject to tax.

Details of grants available to businesses as part of the five-level framework have been published (here).

• Updated information, including how to apply for support is regularly made available here.
• From 2^nd November, firms that are required by law to close will be eligible for the Strategic Framework Business Fund grants every four weeks for as long as the restrictions last. Based on rateable values, awards will be for either £2,000 (<£51k RV) or £3,000 (>£51k RV).
• Businesses which can remain open, but are directly constrained by the measures, will be eligible for grants worth £1,400 or £2,100, again based on rateable value.
• This support is in addition to the UK Government’s revised furlough scheme launching on 1st November.
• These grants will be provided regardless of level, to eligible businesses, and paid in fortnightly instalments.
• Additionally, further support was announced in December which will be made available in January. This is expected to be:
  • Premises under £51k in rateable value:         £3,600 grant
  • Premises over £51k in rateable value:           £25,000 grant
  • The reason for the difference in amounts is due to those being rated above £51k  receiving zero support from the first round of grants last May.
• Further conversations are ongoing between the industry, Scottish and UK Government’s on additional support.
• If you have any questions, please contact ptogneri@beerandpub.com

The First Minister for Wales announced £340m available through the Economic Resilience Fund to support businesses affected by the new changes to the regulations which came into force in December.

This includes a specific fund to support hospitality and tourism businesses. The new Welsh Government support is split into two funds: a £160m Restrictions Business Fund and a £180m sector-specific Economic Resilience Fund grant scheme.

The Restrictions Business Fund will enable eligible businesses in the hospitality, tourism and leisure sectors which pay non-domestic rates (NDR) to access grants of up to £5,000. Businesses not on the NDR system, will be able to continue to apply to local authorities for the Lockdown Discretionary Grant of up to £2,000.

In addition, hospitality, tourism and leisure businesses will be able to access a sector specific Economic Resilience Fund grant scheme. Small and medium sized businesses meeting the criteria could receive up to £100k. Larger Welsh-based businesses could receive up to a maximum of £150k.

Details of the funding available to businesses can be found here.

The Northern Ireland Executive has launched a Localised Restrictions Support Scheme (details here).  This Scheme provides financial support to businesses which have been required to close or severely limit operations at their premises under the Health Protection Regulations that have been put in place by the NI Executive. This is one element in the support package offered – details of other support measures are available on the NI Business Info website, here.

The Scheme will apply to businesses, subject to eligibility criteria, including:

• Cafes, pubs and restaurants that are required to close or limit their services to a takeaway service instead;
• Hotels, guesthouses and registered bed & breakfasts that have been required to limit the provision of services for residents only.

There are three levels of support available to businesses who fall into the eligible categories and whose application is successful. The level of support that successful applicants will receive is based on the Total Net Annual Value (NAV) of the property from which the business operates:

• Lower rate: £800 for each week that the restrictions apply for:
  • a business that is the sole occupant operating from a property with an NAV of £15,000 or less,
  • a guesthouse or bed & breakfast with a capital value (which means it is valued as a domestic property for rates); or
  • a business that is the occupier of a part of a property which is restricted with any NAV.
• Standard rate: £1,200 for each week that the restrictions apply for:
  • a business that is the sole occupant of a property with an NAV between £15,001 and £51,000.
• Higher rate: £1,600 for each week that restrictions apply for:
  • A business that is the sole occupant of a property with an NAV of £51,001 or more.

The Northern Ireland Executive also operated a Covid Restrictions Business Support Scheme in two parts (details here and here).

• Part A – A business that is required to close or cease trading under the Health Protection (Coronavirus, Restrictions) (No.2) Regulations (Northern Ireland) 2020 but is not eligible for the Local Restrictions Support Scheme. [Part A closed on 16 December 2020.]
• Part B – A business which has not been forced to close, but is part of the direct supply chain to a business that is forced to close/cease trading under the Health Protection (Coronavirus, Restrictions) (No.2) Regulations (Northern Ireland) 2020, and as a result it has been severely impacted. [Part B closed on 16 December 2020.]
• CRBSS Part A paid eligible businesses a grant equivalent to £600 for each week the initial Health Protection Regulations were in place.

We have had a number of queries from members about how they can take advantage of the additional €3 Million Covid-related EU State Aid provision (section 41) in relation to claiming additional local authority business support grants (LRSGs) – up to £3,000 per month and the £1,000 wet-led pub additional Christmas grant.

The UK Government applied to the European Commission to take advantage of this additional provision and this was granted before Christmas.  From 1^st January, following the end of the transition period on leaving the EU, the UK will be devising its own subsidy regime, details to be announced.  This does not impact the application of the 3 Million Euro provision now in place, although this additional EU provision, as we understand it, currently only capture grants issued for the period up to the end of December 2020.

So, can companies now claim for grants up to 3 million Euro and is this on top of previous cap?

Yes, but subject to certain criteria being met and evidence provided (see below).   Updated guidance on administering the business support grants has been issued to local authorities including this new provision and the key elements of this.  Companies will now need to engage with local authorities regarding the process and the evidence required to apply under this provision.

This is additional funding in addition to the previous scheme that allow for up to €1million euros (€200m de minimis over 3 years + a further €800m cap).  Those businesses, who haven’t reached the cap, can still apply to this scheme and this will remain the primary provision for individual pubs and small multiple operators for 2020 grant funding.

As noted above,  all the current State Aid provisions, including this one, currently only extend for the period from 1^st March 2020 to 31^st December 2020.  Grants issued covering January 2021 onwards, will likely be subject to the new UK State Aid regime to be announced in due course

Is there is an additional proof of evidence requirement under this new €3 Million provision?

Yes, company turnover must have fallen by at least 30% due to the pandemic and companies will need to provide evidence of this and that they still have uncovered costs[1], for which they can claim up to 70% in Aid under this provision.  Put simply, companies will need to demonstrate a loss in their P&L for this period and then can claim up to 70% of this (90% for micro and small businesses)

A business would have to demonstrate this, and the LA would need to confirm compliance.  The money applied for cannot also be used to pay off the same costs that other aid can cover.

State Aid can be complicated and it is important local authorities provide a consistent and pragmatic approach to the evidence base required from companies.  For example, the BEIS guidance sets out a requirement to provide evidence of a 30% fall in turnover based on audited or statutory accounts  compared to same period (March to December) in 2019.

Of course, It may be a while yet before annual accounts for 2020 are signed-off and if companies have an April-Mar financial year, then this could cause some issues as well, as the 10-month period will span separate periods and data for the current year won’t be available for a while.  This provision will therefore need a pragmatic approach to work, so for example some interim data provided from a company accountant that can be followed up at a later date with final accounts would seem a sensible approach. Indeed, this is consistent with the legislation[2]

We are continuing to engage with BEIS in relation to this new provision and seeking additional clarity on their expectations of LAs in relation to this as well as the future State Aid Regime.

We are also seeking dialogue with the LGA to try and ensure a consistent, timely and pragmatic approach by individual LAs.