Start your own Business Relief

How do you calculate the relief?

With the Start Your Own Business Relief, you can earn up to a maximum of €40,000 per year without paying Income Tax (IT). This exemption is calculated on the first two years of your new business. The 24-month period starts from the date you start your new business.

If you started your business in January, then you have used up your 24 months of relief in year 1 and year 2. There is no relief available for year 3. If you started your business later in the year then there is still relief available in year 3.

Year 1

If you start your new business in January, you are allowed an exemption of €40,000 for year 1. If you start later in the year, the exemption is reduced based on the portion of the year that remains.

Year 2

You are allowed an exemption of €40,000. The second year will always include a period of 12 months, so this amount will not be reduced.

Year 3

You are allowed the remainder of the exemption that you did not use in year 1. For example, if you claimed 11 months in year 1, you have one month left to claim.

You may wish to choose a different year end for your accounts. To find out what profits are taxable in each year, refer to the special rules for determining the basis period on commencement to trade.

Next: What happens if you make a loss in the first year?