Tax relief available for long term unemployed to start a new business

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 2016.

How do you qualify for the relief? You may qualify for this relief if:

(a) you have been unemployed for twelve months or more, and

(b) 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.

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 you can 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:

• Self-employment
• Registering for Income Tax
• Paying and Filing your annual Tax Return
• Self-Assessment

Log onto revenue.ie and search under registering for tax.  The contact details for the South East region business taxes lo call number is: 1890 24 04 24 (for IT, CT, CGT, VAT, CAT, RCT & Registrations).

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, ie 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.

Remember:

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.

For more information on registering for Income Tax or becoming self-employed, contact Kevin O’Donnell on 053 9170507  or kodonnell@rda.ie