What we offer

A subsidy is where a public authority – for example, central, devolved, or local government, higher education organisations, universities and public health organisations – provides support to an enterprise that gives that enterprise an economic advantage, meaning equivalent support could not have been obtained on commercial terms.

A subsidy can take the form of a grant, a tax break, a loan, foregone interests on loans, guarantees or equity investment on favourable terms, provision of goods, services or land on preferential terms or at no cost to the enterprise, or the use of facilities below market price, amongst other kinds of support.

An ‘enterprise’ under the Subsidy Control Act is a person or group of persons “engaged in an economic activity that entails offering goods or services on a market” (Subsidy Control Act 2022, section 7). The legal form of that ‘person’ or organisation is not relevant - status as an enterprise is based solely on the nature of the activities they undertake.

The purpose of UK Government Subsidy Control regime is to prevent public authorities from giving a financial advantage to an enterprise in a way that could distort competition. As long as subsidies are awarded in a way that complies with Subsidy Control Act 2022 and supporting guidance, subsidies are legitimate ways for public funding to support economic activities.

Awarding of subsidies by public authorities to enterprises in the form of grants or other support was governed by a body of legislation that changed following the UK’s exit from the European Union on 1 January 2020.

Former EU State Aid legislation, including ‘De Minimis’ Regulations (including Commission Regulations (EU) No 360/2012, (EU) No 1407/2013 and Commission Regulation (EU) No 1408/2013) have now been replaced by the Subsidy Control Act 2022, which came into force on 4th January 2023.

The period in between was covered by legislation under the UK-EU Trade and Cooperation Agreement (TCA) and accompanying Department for Business, Energy and Industrial Strategy (BEIS) Guidance on the UK’s International Subsidy Control Commitments. Article 364(4) or 365(3) of the TCA permitted subsidies or ‘Small Amounts of Financial Assistance’ (SAFA) valued as ‘Special Drawing Rights’ (SDR).

MFA is capped at a financial threshold, meaning an enterprise recipient cannot receive more than £315,000 over a rolling three-year period (the “applicable period” – see further below).

Single awards of over £100,000 have to be reported separately by the public authority making the award by registering these on the UK Subsidy Database. These amounts are set by the Subsidy Control Act 2022, section 36.1 and 36.4).

To calculate the MFA allowance:

• any new MFA awards have to be added to previous De Minimis aid awards4 or Small Amounts of Financial Assistance (SAFA) or Services of Public Economic Interest (SPEI) financial assistance;
• the allowance covers awards received over a historic three-year ‘applicable period’ (see below);
• the allowance is calculated at a group level across interconnected enterprises under common ownership or under ‘common control’ (see further below).

Your organisation should have a record of assistance received, but if in doubt, contact the public authority who made the award to confirm its nature, value and date of award.

De Minimis awards may have been reported in euros, or SAFA awards may have been made in SDR. The International Monetary Fund tool (https://www.imf.org/external/np/fin/data/rms_five.aspx) should be used to convert SDR values to GBP£.

The applicable period is the period comprising the elapsed part of the current financial year (the year in which the MFA is given), and the two financial years immediately preceding the current financial year. The Act defines a financial year as a period of 12 months ending with 31 March (Subsidy Control Act 2022, section 36.2 and 42.9).

MFA thresholds apply at the level of enterprises operating under ‘common control’ or common ownership. If your enterprise is a subsidiary (under the Companies Act 2006, section 1159) or part of a group of enterprises – including a body corporate, a partnership or an unincorporated association - please review the Subsidy Control Act 2022 section 7 and 8 to determine whether you are operating under common control. Further details on this can be found in Annex1 of the Statutory Guidance, para 15.40- 15.46, pp.170-172.

In addition to the Act, further guidance on application is published on the UK Government website:

• UK Subsidy Control Act 2022 Statutory Guidance

If you are unclear about your obligations or the requirements on your organisation, please seek independent legal advice.