The Start Your Own Business scheme provides for relief from Income Tax for long term unemployed individuals who start a new business. The scheme will provide an exemption from Income Tax up to a maximum of €40,000 per annum for a period of two years to individuals who set up a qualifying business; having been unemployed for a period of at least 12 months prior to starting the business. It runs from 25 October 2013 to 31 December 2018.
Who qualifies for this relief?
You may qualify for this relief if:
- You have been unemployed for twelve months or more, and
- During that period you were in receipt of any of the following:
- Crediting contributions
- Jobseeker’s allowance
- Jobseeker’s benefit
- The one-parent family payment
- Partial capacity payment
Periods of time spent on certain training courses and schemes will be treated as part of a period of unemployment. If you were entitled to jobseeker’s allowance or jobseeker’s benefit immediately before starting on the training course or scheme, then any allowance paid for attending such a course will be treated as if it were jobseeker’s allowance or jobseeker’s benefit.
Examples of training courses and schemes would include FÁS training courses, Community Employment Schemes, Job Initiative and Back to Education Schemes.
If you are unsure as to whether or not you qualify as long term unemployed please read the following examples or contact your local Social Welfare office.
John was in receipt of jobseeker’s allowance for 6 months. He then went on a Back to Education Scheme for 1 month after which he was again in receipt of jobseeker’s allowance for 5 months. He is planning on setting up a new business. Can he avail of this relief?
Yes. John has been unemployed for 12 months (6 months + 1 month + 5 months) and has been in receipt of jobseeker’s allowance for that period.
Joan was in receipt of jobseeker’s allowance for 10 months. She found a job but it didn’t work out and after 2 months working, she is back in receipt of jobseeker’s allowance for the last 4 months. She is planning on setting up a new business. Can she avail of this relief?
Yes. Joan’s 10 month period of unemployment is linked to her 4 month period giving her a total period of unemployment of 14 months. Note that this link only exists where the two periods of unemployment are separated by less than 12 months.
Are there any restrictions for my business under this scheme?
If you qualify for this relief, the restrictions under this scheme are:
The business must be set up between 25 October 2013 and 31 December 2016 by a person that qualifies for the relief.
It must be a new business and not a business that is bought, inherited or otherwise acquired.
It must be unincorporated, that is, it must not be registered as a company.
How do I apply for the relief?
This relief does not require pre-approval unlike the Back to Work Enterprise Allowance scheme which is administered by the Department of Social Protection. Instead, you claim this relief by completing the relevant section of your annual Income Tax return form each year.
For more information about:
- Registering for Income Tax
- Paying and Filing your annual Tax Return
- Self Assessment
go to: Running a Business.
You should note that ROS, Revenue’s Online Service, is an easy way to deal with your tax obligations. ROS even provides you with a calculation of the amount of income tax, USC and PRSI that you owe.
If you do not want to use ROS to file your tax return, if you file a paper tax return before 31 August, Revenue will send you a calculation of the amount of tax, USC and PRSI you owe to help you meet your payment obligations.
The Start Your Own Business relief only applies to Income Tax; it does not extend to USC and PRSI. USC and PRSI will be payable on any profits earned in the new business.
If you would like to further information or would like to discuss any tax matters please contact our Tax Manager, Jane Jackson
Contact us on +353 42 933 9955
Or email email@example.com.
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