There are a number of tax reliefs and incentives available that could apply to your business, depending on its size and sector. It is important to know what you are entitled to so you get everything you can to help your business to grow.

If you are interested in starting your own company you may be entitled to a tax refund of up to 41% of the capital funding that you invest into the company under a Government scheme called Startup Refunds for Entrepreneurs (SURE). Under this scheme, entrepreneurs can make a claim for a refund against income tax they paid over the past six years.

SURE is targeting those in employment, who are unemployed, who have retired and who have set or who are considering setting up their own businesses. The general conditions for SURE are that you must:

• Establish a new company and engage in a qualifying trading activity(s); and,
• Invest money in the new company by way of purchasing new shares; and,
• Have had mainly PAYE income in the previous four years (This would include a person currently in PAYE type employment, an unemployed person, a person recently made redundant or a retired person); and,
• Take up full-time employment in the new company either as a director or an employee.

Exclusions to that “qualifying trade” rule include professional services (such as accountants, solicitors and business advisors), certain financial services (loans, commodities), film production and dealing in land. A company that takes over a previous trade is not eligible. Neither is a company that continued the trade of an individual who is seeking SURE relief and who was previously a sole trader.

The company must be less than two years old from the date of incorporation to qualify. The minimum SURE investment is €250 and the maximum investment is €700,000, which is €100,000 each for each of the last six years as well as €100,000 for the current year. The investment made by you can be used to reduce your taxable income in one or more of the previous six tax years, which would result in a tax refund to you.

You can find more information on SURE here.

Once you have started to trade, you may be able to claim a tax deduction for certain qualifying expenses incurred in respect of the business in the three years before the commencement. For tax purposes, Pre-trading Expenses are treated as if they had been incurred at the time that the trade started. These may include business-related leasing costs, legal fees and the cost of preparing business plans and feasibility studies.

Certain additional tax initiatives may be available depending on the activity of the business – for example, relief for expenditure on research and development (R&D). If a company spends money on research and development activities, these activities may qualify for the R&D Tax Credit. The credit is calculated at 25% of qualifying expenditure and is used to reduce a company’s Corporation Tax (CT).

A company may qualify for the R&D Tax Credit if:

• it is within the charge of CT in Ireland

• it carries out qualifying R&D activities in Ireland or the European Economic Area (EEA)

• the expenditure does not qualify for a tax deduction in another country.  

The research and development activity must:

• involve systemic, investigative or experimental activities
• be in the field of science or technology
• involve one or more of these categories of R&D:
  • basic research
  • applied research
  • experimental development
• seek to make scientific or technological advancement
• involve the resolution of scientific or technological uncertainty.  

To read more about R&D Credit please click here.

You may also be able to apply for tax relief for start-up companies known as Section 486C tax relief. It is a reduction of your Corporation Tax (CT) for the first three years you trade. The relief can be applied to the profits from your new trade and on chargeable gains made on assets used in that trade.

You may be entitled to relief if your CT due is €40,000 or less in a tax year. If your CT due is between €40,000 and €60,000, you may be entitled to partial relief.

Tax relief for start-up companies also depends on the amount of employer’s Pay Related Social Insurance (PRSI) you pay. This must be a maximum of €5,000 per employee and €40,000 overall.

You can apply for tax relief from Corporation Tax (CT), if your start-up company:

• is incorporated on or after 14 October 2008
• is set up and began trading between 1 January 2009 and 31 December 2021
• does not exceed specified levels of CT due.

It is important to note that the relief does not apply to certain trades such as those involving the primary production of agricultural products, the processing and marketing of agricultural products, export related activities etc. Furthermore, the relief will not apply where the trade was previously carried on by another person in the State.

Read more about CT tax relief here.

Other standard reliefs available to businesses are Business expenses, Losses and Capital Allowances.

You can claim a tax deduction against your business profits for many business expenses that you incur wholly and exclusively for the purposes of the trade. These expenses are normally referred to as revenue expenditure. Revenue expenditure is your day-to-day running costs and it covers such items as wages, rent and running costs of vehicles or machinery. A capital allowance is a tax deduction for expenditure incurred on capital equipment, such as office furniture. This relief is equal to 12.5% of the cost of the asset and is applied every year for 8 years until the total cost is offset. Accelerated capital allowances (a tax write-off given over a shorter period) are available on cars that have low CO2 emissions and for expenditure on certain energy-efficient equipment.

The relief available for losses will depend on whether the business is operated as a sole trader/partnership or through a company.

If you need help to make sure that you are claiming all the tax reliefs available to you and your business book a consultation today!