Temporary income tax relief for the self-employed

Aug 10, 2020

Revenue created a new Tax and Duty Manual to explain certain measures contained within section 10 of the Act.  Section 10 of the Act provides for a number of temporary income tax measures to assist self-employed individuals carrying on a trade or profession, who have been adversely impacted by COVID-19 restrictions.

Under section 10 of the Act:

  • Self-employed individuals can claim to have 2020 losses and certain unused capital allowances carried back and set off against profit for the year of assessment 2019. The total amount, which may be carried back, is limited to €25,000 per individual taxpayer. An additional limit applies for individuals subject to the High-Income Earner Restriction.
  • Self-employed individuals can accelerate the above relief and make an interim claim based on estimated amounts during the year.

The new manual Part 12-01-03 provides guidance on the measures outlined above and also outlines the following on  interim claims relief;

  • Initially interim claims can be made via MyEnquiries, by submitting a letter, the template for which is included in the new manual. Once the interim claim is received, the relief due will be given by amending the taxpayer’s Form 11 tax return for 2019. Accordingly, the Form 11 for 2019 must be filed to avail of the relief.
  • Individuals will be able to revise their interim claim upwards or downwards as the year progresses. A final claim must be included in the Form 11 tax return for 2020, which is due in October 2021.
  • Individuals should take a practical proportionate approach to quantify their relief.  A suggested method for taxpayers to use and document in calculating the relief is included in the new manual.
  • The taxpayer must be fully compliant, in that they must have complied with their obligations under tax legislation in relation to filing returns and paying taxes. Individuals who qualify for tax debt warehousing or have a PPA for non-COVID-19 tax debt will still be regarded as tax compliant.

In addition, section 10 of the act provides an option to individual farmers to step out of income averaging for the tax year 2020, notwithstanding that the farmer may also have stepped out of income averaging in one of the four preceding tax years. The manual Part 23-01-34 - Averaging of farming profits - has been updated to include guidance on this measure.