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Forum Home  →  Discussion  →  Covid-19 issues  →  Thread

Small Business Grant Fund

Liz W
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Welfare Benefits Unit, York

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Hi

A UC claimant has been told that the Small Business Grant Fund will be taken into account as income. I’ve looked at the description for the SBGF and understand that it provides up to £10,000 as a one-off grant to help small business owners meet their operating costs.

I can’t see that this could be treated as earnings and it doesn’t appear to fit within the listed specified income categories for UC. Therefore, maybe it should be ignored!

Having posted the above I’ve done a bit more internet searching - it is taxable and forums seem to suggest it would be treated as income when filling out tax returns - so maybe it is income ...

Any thoughts? I can clearly see info re SEISS but not this grant.

Liz

[ Edited: 27 Apr 2020 at 01:49 pm by Liz W ]
Va1der
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Welfare Rights Officer with SWAMP Glasgow

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Makes sense for it to be counted as business income - i.e. offset by his expenses to determine UC award (if any).

Saying that, I have no idea how the Fund works, but it being a grant it would make sense to apply for an amount that allows you to cover your own wages.

Ianb
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Macmillan benefits team, Citizens Advice Bristol

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I was trying to find out about this too and agree that there doesn’t appear to have been any statements about it.

The SEISS is clearly stated as an income replacement scheme and it has also been clearly stated that it will be treated as earnings for UC.

Although the SBGF will be part of the taxable income for the business I do wonder whether for UC purposes it should be treated as business capital rather than income. It is after all based on the rateable value of property rather than related to any income. Specifically it is also linked to business property rather than personal income.

However i can’t find anything to substantiate an argument either way.

Liz W
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Welfare Benefits Unit, York

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Thanks for these replies. I agree that it seems to have been set up to cover business expenses rather than having an income-replacement focus - the relationship to benefit entitlement doesn’t seem to have been addressed (yet).

If it is treated as earnings we’ll all be having a merry time calculating the surplus earnings threshold too - also in relation to the SEISS scheme for a lot of people who receive 3 months’ income in one payment. Thank goodness we’ve moved to a less complex benefit system (sarcasm - lowest form of wit but highest form of intelligence?? It’s been a long day).

I’ve put a query in to Money Saving Expert too!

dizzymare
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Welfare benefits adviser - Dudley MBC

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morning - just had the same query so hoping there might be an update soon as I have no idea what to tell my client.  Seems a bit counter productive to treat it as income but nothing is ever as it seems in the world of benefits!

Scott
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Welfare benefits advisor - Leeds City Council

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Our housing team were given the following response from our local DWP liaison when they asked about the various schemes, which if correct suggests it will not be treated as income

‘In terms of our position on the various schemes this is where we currently are:.
We know that we will be taking payments of S. I.E.S.S into account against their U.C payments as “earnings”, when they are received.

In terms of the business support grant funding programme this should be disregarded & not treated as income.

This then leaves the business interruption loan scheme, which we do not have clarity or confirmation of at present. We can raise this as an issue, but we would need details of a specific customer, who has received this, in order to get progress & get a definite answer here’

 

HB Anorak
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Benefits consultant/trainer - hbanorak.co.uk, East London

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The small business grant will be awarded to the person who is liable for business rates.

In some cases that will be a limited company, and how that money is treated will then depend on whether UC has invoked the power in Reg 77 to treat the company as “analogous” to sole trader self employment.

In other cases the eligible ratepayer will be a natural person, either because they are self-employed or because they are the tenant of the business premises (usually because the landlord wanted a natural person to be liable for rent and not a company that could disappear in a puff of smoke owing thousands) even though the trading entity is a company.

If the ratepayer is a self-employed person I find it hard to see any difference in principle between the small business grant and the SEISS.  These are both no-strings grants to a natural person.  Incidentally, I haven’t seen anything anywhere to say that you cannot be eligible for both: if you are self-employed and submitted tax returns for the required period you get the SEISS; and if you are liable for the appropriate kind of business rates you can get the small business grant.  The official info targeted specifically at self-employed people does not mention the small business grant, but the official info about the small business grant says neither that it is mutually incompatible with SEISS nor that it is only available to companies: it talks about “businesses”, which includes both companies and self employed people (and LLPs for that matter).

Whether it’s because of ignorance about the legal structure of “businesses”, or a genuine desire to knock out UC payments in a relaxed way without standing on ceremony, or maybe a bit of both, it seems DWP is willing to ignore quite a lot of cash:

- “That’s for my tax, you cannot touch it”
- “That came from a small business grant, you cannot touch it”

dizzymare
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Welfare benefits adviser - Dudley MBC

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Scott - 28 April 2020 11:43 AM

Our housing team were given the following response from our local DWP liaison when they asked about the various schemes, which if correct suggests it will not be treated as income

In terms of the business support grant funding programme this should be disregarded & not treated as income.

/quote]

is there any legal backing to this please? an ADM or such like? am a bit wary of saying yay or nay to my client without something to back up what im saying. I have messaged our local partnership team too so see what comes back.

Scott
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Welfare benefits advisor - Leeds City Council

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is there any legal backing to this please? an ADM or such like? am a bit wary of saying yay or nay to my client without something to back up what im saying. I have messaged our local partnership team too so see what comes back.

[/quote]

I suspect there is no actual guidance and we have nothing to verify this, other than this information was from our local partnership contact who we know to be a reliable and credible source.  I would have expected him to have checked this before giving us this information but we have nothing else to back it up

dizzymare
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Welfare benefits adviser - Dudley MBC

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thank you for that. I suspect this is correct as it makes sense, but in the absence of any guidance to UC case managers, I do worry about what information will be given to claimants and how claims will be assessed.

Ianb
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Macmillan benefits team, Citizens Advice Bristol

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dizzymare - 28 April 2020 01:06 PM

thank you for that. I suspect this is correct as it makes sense, but in the absence of any guidance to UC case managers, I do worry about what information will be given to claimants and how claims will be assessed.

In the absence of guidance it is also doubtful that there will be consistent treatment.

dizzymare
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Welfare benefits adviser - Dudley MBC

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this was the response from our partnership manager: 

” As of 24th April 2020 the current guidance is:

Other Covid-19 related Grants/Schemes

There are a range of grants/schemes available to businesses during the covid-19 crisis. These vary by country, so there are different schemes in England, Wales, NI, Scotland.

Where a claimant receives either the following:

• Small Business Grant Fund (SBGF)
• Local Authority Retail, Hospitality and Leisure Grant Fund (RHLGF)

Though the above grants are treated by HMRC as taxable income, these should not be recorded as income but treated as capital and disregarded.

Other grants or subsidies received, which HMRC treat as taxable income, must be declared as business income.”

I have given this information to my service user and just asked her to let me know if there are any problems. fingers crossed all goes well