New Covid-19 Tax Reliefs for Self Employed

The Revenue Commissioners have today announced new tax relief measures to help self-employed people whose earnings have been hit by the Covid-19 restrictions.

  • Any self-employed individual who makes trading losses in 2020 can opt to carry back these losses (together with some unused capital allowances) and deduct them from their  taxable earnings for 2019. This is limited to a max. €25,000 limit on the loss to be carried back.
  • It will be possible to make an interim claim this year based on an estimate of the loss incurred in 2020. Obviously the actual loss for this year won’t be known until the end of the year but 2019 tax bills will be payable in the meantime.
  • Farmers may step out of income averaging for the tax year 2020, even if they have also have stepped out of income averaging in one of the four preceding tax years.

Construction Worker Building Timber Frame In New Home

Revenue have also today published worked examples on how the loss carry-back and farmers’ reliefs will work.

It’s also worth noting the following:

The new reliefs doesn’t apply to limited companies, who are already allowed offset current year trading losses against profits in the preceding year, subject to a few minor conditions.

To avail of the loss carry-back relief, you must actually make a loss in 2020. It is not enough for your income to be decimated in comparison with 2019. However it will presumably suit pubs and other businesses whose trading has been badly disrupted this year.