Revenue Note for Guidance
Note: This scheme and the relief under Section 88A has ceased for all employments commencing on or after 1 July 2013.
This section, together with section 88A, provides tax incentives, for both employers and employees, to help the long-term unemployed to return to employment.
Qualifying employees may, in addition to their normal tax credits, claim an income deduction with child additions for the three year period after taking up employment. For the first year, the additional deduction will be €3,810 plus €1,270 for each qualifying child. For the second and third years, the deduction is €2,540 and €1,270 respectively and the child additions are €840 and €425 respectively. The relief for an employee will, at the option of the employee, be allowed in the three year period commencing with either the tax year in which the employment commences or the following tax year. Furthermore, an employee may change jobs once within that three year period and retain the relief.
Both incentives apply in respect of individuals who are/have been
(1)(a) “the Act of 2005” means the Social Welfare Consolidation Act 2005.
“continuous period of unemployment” has the same meaning as in the Act of 2005, that is, any 3 days within a consecutive period of 6 days and any 2 such 6 day periods not separated by more than 52 weeks.
“director” and “proprietary director” have the same meanings as in section 472.
“emoluments” also draws its meaning from section 472 and basically means emoluments which qualify for the PAYE tax credit. Accordingly, proprietary directors and their spouses and the spouses of the self-employed are excluded from the relief. Children of proprietary directors and the self-employed may qualify for the relief if they are entitled to the PAYE tax credit.
“employment” means a PAYE employment.
“employment scheme” means a scheme or programme providing for the payment, either to an employer or an employee, of a grant, subsidy, etc by the State, a statutory body or any public or local authority in respect of an employment.
“qualifying child” has the same meaning as in section 462 and any question as to whether a child is regarded as a qualifying child is determined on the same basis as it would be for the purposes of section 462 and subsections (4) and (5) of that section apply accordingly.
“qualifying employment” is an employment which:
but it does not include
“qualifying individual” means an individual who commences a qualifying employment and who —
was not previously a qualifying individual for the purposes of the relief.
It is to be noted therefore that an individual may be a qualifying individual for the purposes of the relief once and once only.
(1)(b) For the purposes of the definition of “qualifying individual”, periods spent on, and payments received in respect of, certain activities, programmes or courses are deemed to be periods of unemployment and unemployment payments, respectively, for the purposes of the relief. These activities, programmes and courses are —
Sundays are not to be taken into account in calculating periods of unemployment.
(2) A qualifying individual is entitled to a deduction from his or her total income – which may only be set against emoluments from a qualifying employment – as follows —
The deduction may be claimed for the tax year in which the qualifying employment commences or the following tax year.
(3) A qualifying individual with qualifying children is entitled, for the same three year period, to additions in respect of each qualifying child as follows —
Only one span of deductions will be allowed in respect of any one child. Where more than one qualifying individual is entitled to claim in respect of a qualifying child the deduction due for any year will be apportioned between them on the basis of the maintenance of the child or such other manner as they jointly advise the inspector.
(4) If, within the three year claim period, a qualifying individual ceases a qualifying employment, the balance of reliefs due may within that period, be carried over and used in one, and only one, other qualifying employment.
(5) Where the employer or employee has or is benefiting under other employment schemes no relief will be due under this section to the employee (or under section 88A to the employer). In this connection, FÁS (non apprenticeship) training courses, the Community Employment Scheme, the Job Initiative Programme, the “Workplace” 5 week job experience programme and the Back to Education Scheme administered by the Department of Social, Community and Family Affairs are not regarded as employment schemes.
(6) Claims for relief are to be on forms provided by the Revenue Commissioners and must contain such information and other details as the Commissioners may reasonably require.
(7) This Section ceased to have effect for all employments commencing on or after 1 July 2013.
Relevant Date: Finance Act 2021