Thursday 18 January 2018

Tax Relief: Start Your Own Business scheme provides relief on income

Jim Kelly

ONE of the tax incentives introduced in Budget 2014, was the Start Your Own Business scheme to offer income tax relief to individuals starting up a new business.

The scheme provides an exemption from income tax (not USC and PRSI) up to a maximum of €40,000 per annum for the first two years.

Who can qualify for SYOB relief?

The relief is available to individuals who have been unemployed for at least twelve months and during that period were in receipt of one of the following:

• Crediting contribution

• Jobseeker’s allowance

Grant Thornton's Jim Kelly
Grant Thornton's Jim Kelly
Minister for Finance, Michael Noonan, and Brendan Howlin, Minister for Expenditure and Public Reform

• Jobseekers benefit

• The one parent family payment

• Partial capacity payment

Revenue have confirmed that periods spent completing approved training courses will be considered periods of unemployment where the individual was entitled to Jobseeker’s benefit or Jobseeker’s allowance immediately before the commencement of the training course.

To qualify for the relief, 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 and the business must be unincorporated.

How to claim SYOB relief

The process of claiming SYOB relief is straight forward and pre approval from Revenue is not required. The relief is claimed by completing the relevant section of the annual income tax return.

Relief is granted on an actual basis. For example, if you start your new business in January, the cap is €40,000 however if you start the business later in the year then the cap will be reduced proportionately.

For example if you start your business on 1 May 2014 and prepare accounts for the 8 Months to 31 December 2014 showing a profit of €40,000, 8 months remain in the year so you can earn up €26,666 (€40,000 x 8/12) tax free. The balance of €13,334 will be subject to income tax, PRSI and USC.

Further details are available from the Revenue Commissioners.

Jim Kelly is a tax specialist at Grant Thornton.

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