Is it State Aid? - Job Retention Scheme

Will the payments under the Job Retention Scheme be considered State Aid?

Didn't find your answer?

If an organisation receives grants from the government under the COVID-19 support it appears that the State Aid treatment varies. The latest guidance is that Small Business Grants are State Aid - usually considered to be paid under de minimis rules, but sometimes under the Temporary arrangments

Leisure Retail and Hospitality grants are paid under other rules (Temporary COVID rules) and dont count to de-minimis.

But I cant find any guidance on the treatment of payments under the Job Retention Scheme?

I am working on a grants programme that is considered to be State Aid, and usually paid under deminimis rules, but now not sure if organisations will be using up all their de min allowances if they are receiving support under COVID-19 rules..

Do we know yet?

thanks

Replies (13)

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By SXGuy
08th Apr 2020 16:43

Covid 19 grants are taxable income.

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Replying to SXGuy:
Psycho
By Wilson Philips
08th Apr 2020 17:14

That wasn’t the question.

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Replying to Wilson Philips:
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By SXGuy
08th Apr 2020 19:48

Feel free to answer it then...

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Replying to SXGuy:
Psycho
By Wilson Philips
08th Apr 2020 20:51

I would if I knew what the answer is.

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Replying to Wilson Philips:
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By Louise G
08th Apr 2020 23:00

ha ha - yes, I know

Thanks - yes I know they are taxable - thats fine - just want to know if they are de minimis State Aid - I cant find anything on it - There is new guidance for the Small Business and Retail and Leisure grants on the guidance (dated April 3rd) which is quite complicated - There has been some emergency legislation through the EU allowing a Temporary COVID 19 State Aid payments in some cases, but it appears that not everything falls under that - If people use up their de minimis State Aid on Job Retention payments, they wont be able to access other State Aid type support for 3 years (Brexit rules not withstanding) - and they might need it!

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Stepurhan
By stepurhan
09th Apr 2020 10:17

At the moment you can only rely on a negative.

Recently looking at the Employment Allowance (because new PAYE year and some things still carrying on). This is specifically flagged as State Aid on the guidance pages.

None of the COVID 19 grants are flagged in this way. It could be an oversight given the rush this has been done in, but the lack of mention could be considered an indicator it is outside normal State Aid rules.

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Replying to stepurhan:
By Duggimon
09th Apr 2020 10:41

I think I disagree, the business support grants from local councils are almost definitely considered State Aid, there's a field on the application form from Glasgow Council that checks if you've been in receipt of State Aid, implying, if not confirming, that the grant is considered State Aid.

I have no idea about the Job Retention Scheme though, because there's nothing in the guidance on it yet and applications aren't open.

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Replying to Duggimon:
By Duggimon
09th Apr 2020 10:48

Just to add to the above, I didn't know that the EA was considered State Aid, so I went and looked it up and while Stepurhan is correct, it's only considered State Aid from 6 April onwards.

While this is relevant to the original question, it does mean if anyone else is, like me, looking at the business support grants and State Aid requirements, the Employment Allowance does not go on the form as State Aid received in the last three years.

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By Louise G
09th Apr 2020 15:26

OK peeps - look, I am not an accountant, but I do read the government guidance.

Employment Allowance is State Aid under deminimis rules from April 2020 (but oddly not before - not sure how they square that EU legislation circle, but that is what the guidance says) https://www.gov.uk/guidance/changes-to-employment-allowance

The rules for Business Grants and Retail Grants were updated re State Aid on April 3rd - read the governement guidance here: https://www.gov.uk/government/publications/coronavirus-covid-19-business...

Small Business are expected to use de minimis first - Which seems unfair as it limits their ability to access later State Aid grants or support - but hey

Cant find any guidance on Job Retention - I cant see why it WOULDNT be State Aid, since it is Aid from the State to undertakings that may affect EU markets - BUT it is not clear what provisions it is allowed under - ?

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Replying to Louise G:
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By pnown
29th Apr 2020 17:40

THE EA wasn't state aid before 6 April 2020 because there was no financial restriction (there were and still are technical restrictions ) on its availability to employers. Now there is because employers who exceed £100K ERNIC in previous tax year cannot participate .

This MAY explain why CJRS is not State aid because ALL employers with UK employees are eligible so no restriction. HMRC remain silent on the issue as to whether CJRS is state aid or not. Grants under the EU temporary framework cannot exceed Euro 800,000. Employers might receive more than this under CJRS and no mention of a cap has been made so this also is making me think it is not State aid ( opinion .. not a fact)

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By HeatherSimpson
30th Apr 2020 12:47

I have also been pondering this, due to its potential effect on a later R&D Tax Credits claim.

Hopefully, there is more guidance around now but I understand that the JRS grant will not be state aid, as it is available to all. The other grants are restricted to certain businesses and will be state aid.

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By Nygie
06th Jul 2021 13:31

Surely it shouldn't be classed as state aid because it is solely for the employee since the ER NIC and ER pension part of the grant was knocked on the head. The employer is just the middle man for the CJRS grant to get to the employees, so they are retained in employment and not claiming on the benefits system which would have been totally overwhelmed had millions and millions of people been suddenly laid off.

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