Started A New Business? Check If You Qualify For The Start Your Own Business Relief

The Start Your Own Business Relief was introduced as part of the last budget and runs from 25 October 2013 to 31 December 2016. It was introduced to provide income tax relief to long term unemployed individuals who start a new business.

Who qualifies?

In order to qualify for this relief the individual who sets up a new business must meet the following conditions:

  1. Has been unemployed for twelve months or more, and
  2. During that period has been in receipt of any of the following:
  • Crediting Contributions
  • Jobseeker’s Allowance
  • Jobseeker’s Benefit
  • The one-parent family payment
  • Partial capacity payment

How does it work?

If the individual qualifies for the relief, the scheme provides an exemption from Income Tax up to a maximum of €40,000 per annum for a period of two years from the date the qualifying business is commenced.

A qualifying business for the purposes of this scheme is one which satisfies the following conditions:

  • The business is set up between 25 October 2013 and 31 December 2016;
  • The business must be a new business and not one which is merely bought, inherited or otherwise acquired;
  • The business must not be operated through a company.

The relief is dependent on when the business commences

Relief is claimed as part of the income tax return and there is no requirement to seek pre-approval to claim the relief. Calculation of the relief is dependent on when the business commences.

Scenario 1: Business started 1 January 2014 – Year end 31 December 2014

                                                          2014 (12 months)           2015 (12 months)              2016 (12 months)

Maximum Relief Available                  €40,000                            €40,000                               €0


Scenario 2: Business started 1 March 2014 – Year end 31 December 2014

                                                          2014 (10 months)           2015 (12 months)              2016 (12 months)

Maximum Relief Available                  €33,333                            €40,000                               €6,666

The first example is straight forward as the business commenced on 1 January. Therefore, the maximum that is available for relief under the scheme is €40,000 in 2014 and €40,000 in the subsequent year, 2015. No relief is available in 2016 as the 2yr/24month has elapsed.

The second example is slightly more complicated in that the business did not commence until 1 March. Therefore, the maximum relief available is restricted to €40,000 x 10/12, i.e. €33,333 in 2014. In the second year, the max relief available is €40,000 as it is a full 12 month period. At this juncture relief has been applied for a total of 22 months. Therefore, relief can be claimed for 2 months of the 12 month period in 2016, .i.e. €40,000 x 2/12 (€6,666).

Final Note

If you believe that you may be able to avail of this relief please do not hesitate to contact us.

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