Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

CHAPTER 2A

Income tax: Covid-19 loss relief

Overview

This Chapter provides for a temporary loss relief for individuals carrying on a trade or profession, who incur a loss in the period 1 January to 31 December 2020. It provides that such individuals may make a claim to have those losses carried back and deducted from their profits for the tax year 2019.

It also provides that, subject to certain conditions being satisfied, interim claims for relief may be made in respect of losses under this Chapter and unused capital allowances under section 304(3A).

Finally, it restricts the amount of relief that may be claimed in respect of losses under this Chapter and unused capital allowances under section 304(3A). Firstly, it provides that the total amount of relief that may be claimed is limited to €25,000 per taxpayer. Secondly, it provides that the amount of relief that can be given to individuals who are subject to the High-Income Earner Restriction under section 485C is to be calculated after any other relief which they are entitled to claim for the tax year 2019.

395A Right to carry-back losses sustained between 1 January 2020 and 31 December 2020

(1) This subsection sets out two key definitions for Chapter 2A.

The “relevant period” is defined as the period 1 January to 31 December 2020.

A “relevant loss” has the meaning given to it in subsection (2).

(2)Where an individual carrying on a trade or profession, either solely or in a partnership, incurs, in the relevant period (i.e. 1 January to 31 December 2020), a loss which could, but for the making of a claim under subsection (3), be carried forward to the following year or years under section 382, (“relevant loss”) the individual may make a claim for relief under subsection (3).

(3) Subject to section 395C, an individual may make a claim to have any portion of the relevant loss carried back to the year of assessment 2019. Where such a claim is made, the relief shall be given as a deduction from or set-off against the amount of profits on which the individual is assessed under Schedule D in respect of the same trade or profession for the year of assessment 2019.

(4) Where relief for a relevant loss is given to an individual under this section, the individual will not be entitled to relief for that relevant allowance under any other provision of the Income Tax Acts.

(5) Where a relevant loss is carried back under this section, relief will be given for a loss incurred earlier in time before relief is given for a loss incurred later in time.

Relevant Date: Finance Act 2021