Tax Relief for Entrepreneur, Start Up Businesses/Companies

This morning the Irish Government revealed an innovative new ‘cash for start-ups’ initiative called the SURE scheme, which lets founders claim 41pc of their tax back on earnings over the last six years.

The scheme was unveiled this morning by Finance Minister Michael Noonan TD and Jobs Minister Richard Bruton TD  and is aimed at encouraging more people to start their own companies.

1. How does the SURE scheme operate?

The SURE scheme operates as a refund of income tax paid by the person starting the business in the six years prior to the business being started. All income tax paid in those six years can be claimed as a refund under the scheme, subject to an overall limit of 41pc of the total investment in the business.

2. Who is the SURE scheme aimed at?

It is targeted particularly at encouraging people in PAYE employment as well as unemployed or retired people to start their own businesses. Reclaiming six years’ worth of tax could give you the seed capital you need to get the ball rolling. It also can be used alongside other ways of raising start-up funding alongside funding from venture capital investors, angel investors and angel syndicates and bodies like Enterprise Ireland.

3. 41pc tax-back for six years sounds like a good deal, why is the Government of Ireland doing this?

Jobs. The Government estimates that start-ups could generate more than 90,000 jobs over the next few years. It is understood that two-thirds of all new jobs in the Irish economy are created by start-ups in their first five years of existence.

4. How do I know how much tax I can get back if I want to start a business?

A refund calculator has been developed, which can be found at This will allow potential entrepreneurs to create a printout outlining their potential refund that they can then bring to the bank or to show other potential investors to build up the capital they need to get started. The information you need for the calculator to estimate how much tax you paid can be found on your P60 or P21.

5. Okay, it sounds too good to be true. What are the catches?

It is straightforward. You must be starting a new company and investing money in the company by way of purchasing new shares. You would need to demonstrate that you had mainly PAYE income for at least the previous four years, which includes a person in current PAYE employment, recently made redundant or recently retired. Finally, you must be committed to taking up full-time employment in the new company either as a director or an employee.

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Example of deal for troubled mortgages

Pepper Asset Servicing has announced details of how it plans to deal with 3,500 subprime mortgage customers in Ireland. The deal on offer may be indicative of future deals that banks may offer to mortgage holders who cannot pay their mortgages on time.

– Mortgages will be split into two parts, one live and one parked. The split will be based on the ability of the person to repay.

– Up to half the mortgage can be parked until a later date. The live part is paid under a restructured agreement.

– The mortgage agreement is reviewed every three years. Pepper will “subject 50% of any increased earnings to review”.

– If mortgage repayments under the new, agreed schedule are kept up, a 5% rebate is applied to the parked mortgage, i.e. 5% of the total paid in the year is deducted from the parked mortgage.

– If the mortgage holder can pay more than the agreed repayment amount, up to 20% of payments made in a year can be deducted from the parked mortgage.

– Interest will not be charged on the parked mortgage.

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Tax Payment Difficulties

Revenue is determined to maintain the current high levels of compliance notwithstanding the more difficult economic circumstances in which businesses and taxpayers are now operating. Therefore Revenue expects that taxpayers and businesses organise their financial affairs to ensure that they pay their tax debts by the due date.

Revenue also acknowledges that in the current economic slowdown some businesses and taxpayers are currently experiencing difficulties in meeting their tax payment obligations even where they are fully committed to so doing and in more favourable economic and financial circumstances did precisely that.

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Self Assessment

Self-Assessment gives you greater control and responsibility over your tax affairs. It applies for Income Tax purposes to:

  • Self-employed people (i.e. people carrying on their own business including farming, professions or vocations)
  • People receiving income from sources where some or all of the tax cannot be collected under the PAYE system, for example: profits from rents, investment income, foreign income and foreign pensions, maintenance payments to separated persons, fees, profit arising on exercising various Share Options/Share Incentives.

Under Self-Assessment there is a common date for the payment of tax and filing of Tax Returns, i.e. 31 October. This system, which is known as ‘Pay and File’ allows you to file your return and pay the balance of tax outstanding for the previous year at the same time. Under this system you must:

  • Pay Preliminary Tax for the current tax year on or before 31 October each year,
  • Make your Tax Return after the end of the tax year but not later than the following 31 October.
  • Pay any balance of tax due for the previous tax year on or before 31 October.
  • Pay any Capital Gains Tax on disposals made between 1 January and 30 September of the current tax year.

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