A new relief for long-term unemployed starting a business

Background

In Budget 2014 the minister for finance announced a new relief targeted at encouraging long term unemployed to set up new businesses. The relief was to be by way of relief from tax on profits in the first two years of trading, capped at a value of €40,000 per annum.

New provisions

The new section provides that where on making a claim, an individual proves that he/she is a qualifying individual, he/she shall be entitled in any year of assessment falling wholly or partly within the qualifying period to deduct from or set off against profits or gains of the new unincorporated business on which that individual is assessed under Case I or Case II of Schedule D, an amount of up to €40,000 per annum.

• The qualifying period is 2 years from the date of commencement of the new business by the qualifying individual.
• A qualifying individual means an individual who was not previously a qualifying individual for the purposes of this relief previously and who commences a new business and who has been

Continuously unemployed for a period of 15 months immediately preceding the commencement of the business and in respect of that period of unemployment was entitled to crediting contributions within the meaning of section 33 of the social welfare consolidation act 2005; or
In respect of a continuous period of unemployment of not less than 390 days immediately preceding the commencement of the business, has been in receipt of jobseeker’s benefit jobseeker’s allowance or a one-parent family credit,

A new business will mean a business commenced by the qualifying individual during the period beginning on 1 January 2014 and ending on 31 December 2016, but will exclude any trade:

• Which was previously carried on by another person and to which the qualifying individual has succeeded; or
• The activities of which were previously carried on as part of another person’s trade or profession

A continuous period of unemployment is assessed having regard to section 141(3) of the Social Welfare Consolidation Act 2005.In this regard, any three days of unemployment. Whether consecutive or not, within a period of six consecutive days shall be treated as a week of unemployment and any two such weeks not separated by more than 52 weeks shall be treated as one continuous period of unemployment. In some cases, careful examination of the benefit history of the individual will be required but it might be noted that qualifications for credit contributions may fill in some gaps where benefits have not been paid for the requisite period.

Additionally it might be noted that attendance at training or other courses approved by the Minister for Social protection or the Minister for Education and Skills, with the consent of the Minister for Finance, will be deemed to be a period of continuous employment for the purposes of the relief. Payments received under such courses or assignments will also be treated as unemployment payments where unemployment payments were received by the individual in the period immediately prior to the commencement of the period.

This type of relief should not be ignored by unemployed individuals it is a very beneficial saving for individuals with the determination and perseverance to believe in their own abilities and start a new business. CPC & Co would be delighted to assist an individual that wishes to discusses this opportunity further.