State aid: guidance

De minimis aid

The European Commission considers that public funding to a single recipient of up to €200,000 over a three-year fiscal period has a negligible impact on trade and competition, and does not require notification. This aid can be given for most purposes, including operating aid, and is not project-related. This is generally known as Industrial de minimis aid because of the economic sectors it supports.  Separate rules apply to the Agriculture and Fisheries sectors (see below).

This does not mean that all funding under the €200,000 ceiling should be awarded as de minimis.  It is strongly recommended to give even small amounts as aid under a specific approved scheme, or a block exemption, if possible, and to keep de minimis cover as a backup for when there are no other options.

The maximum de minimis funding any single recipient can receive is €200,000 (cash grant equivalent) over a three-year fiscal period. The sterling equivalent is calculated using the Commission exchange rate applicable on the written date of offer of the de minimis funding.

This ceiling takes into account all public assistance given as de minimis funding for the current and previous two fiscal years which can take various forms (grants, loans, subsidised contracts, etc).  Aid given under an approved scheme does not have to be cumulated with de minimis aid, provided any such de minimis aid is not awarded towards the same eligible costs as those supported via that approved scheme.

Exclusions:

1. De minimis aid cannot be given for export-related activities (except attendance at trade fairs) or aid favouring domestic goods over imports.

2. For undertakings active in the road freight transport sector, the de minimis ceiling is €100,000.

3. De minimis aid cannot be awarded for the acquisition of road freight transport vehicles.

4. De minimis aid cannot be used to top up awards made under approved state aid schemes, resulting in a circumvention of the aid intensities set out in the rules attached to such schemes. In these cases it can only be awarded towards separate eligible costs.

What you need to do

1. When granting de minimis aid you must ensure that the new award does not breach the relevant ceiling over a three-year fiscal period.

2. You must ask the beneficiary concerned about any de minimis aid received during their own current and the previous two completed fiscal years and determine how much de minimis aid can still be awarded without breaching the relevant ceiling.

3. You must also inform the recipient explicitly that it is de minimis aid you are giving them, for their future reference.

What to include in the grant offer letter

The offer letter should include the value of the award in Euros and the following paragraph (which can be adapted depending on the relevant ceiling being employed):

“Under EC regulation No 1407/2013 (de minimis aid regulation), this is a de minimis aid. There is a ceiling of  €200,000 for all de minimis aid provided to any one firm over a three-year period. Any de minimis aid awarded to you under this offer letter will be relevant if you wish to apply, or have applied, for any other de minimis aid. For the purposes of the de minimis regulation, you must retain this letter for three years from the date on this letter and produce it on any request by the UK public authorities or the European Commission. (You may need to keep this letter for longer than three years for other purposes.) “

Separate rules apply to de minimis aid for the Agricultural and Fisheries sectors, as follows:

Agricultural de minimis

Agricultural de minimis (Regulation (EU) No 1408/2013) allows limited amounts of aid to be given for activities related to the production of agricultural products (e.g. live animals, meat, fruit, vegetables, etc). It does not apply to the processing and/or marketing of these products. The maximum that can be given to any beneficiary is €20,000 over any consecutive three-year fiscal period. Commission Regulation (EU) 2019/316 of 21 February 2019 amends Regulation (EU) No 1408/2013.

Each Member State also has a limit on the total amount of aid that can be given under this Regulation, which means all agricultural de minimis awards must be registered with the State Aid Unit. It need not be given in the form of a grant, but must be in a form that is quantifiable in advance. It cannot be given to ‘top-up’ aid for the same activity under any other provision if the total aid breaches the maximum allowed under that provision.

Fisheries de minimis

Fisheries de minimis (Regulation (EU) No 717/2014) allows limited amounts of aid to be given for the production, processing and marketing of fisheries products (e.g. fish and shellfish). The maximum that can be given to any beneficiary is €30,000 over any consecutive three-year period. Each Member State also has a limit on the total amount of aid that can be given under this Regulation, which means all fisheries de minimis awards must be registered with the State Aid Unit. It need not be given in the form of a grant, but must be in a form that is quantifiable in advance. It cannot be given to ‘top-up’ aid for the same activity under any other provision if the total aid breaches the maximum allowed under that provision. It cannot be used for activities that will increase fishing capacity, or to purchase or build fishing vessels.

HMRC National Insurance Employment Allowance

Businesses and charities who employ people can claim the relief against their first £3,000 of secondary “employer” Class 1 National Insurance liability in a tax year. For a large business with a big payroll the whole £3,000 might be received in the first month of the tax year. However, smaller businesses will receive a portion of the relief each month as they pay their employees. If they do not end up with £3,000 of employer NICs liabilities in a tax year then their Employment Allowance entitlement is adjusted down to match the actual outturn. This means that a few weeks after the tax year has ended they will know what their actual eligibility for the Employment Allowance was in the previous year.

As State Aid de-minimis is calculated over a rolling three year fiscal period claiming the allowance in the 2020-2021 financial year would mean ensuring any agriculture de minimis payments that have been received in the current and two previous financial years does not exceed €20,000. 

More information

For more information on de minimis aid you can check the frequently asked questions or contact the State Aid Team. You may also find it useful to read the full text of the regulation on the European Commission website.