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 www.sure.gov.ie. 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.