Sam qualifies for Start Your Own Business Relief. She started her business on 1 January 2014 and made up her accounts to 31 December each year. In 2014 she made a profit of €3,000 while in 2015 she made a profit of €15,000. Each year she is also allowed capital allowances of €2,500.
In year 1, Sam claims Start Your Own Business Relief against the profit of €3,000 and so can carry the €2,500 capital allowances forward.
In year 2, Sam claims Start Your Own Business Relief against the profit of €15,000. She can carry the €2,500 capital allowances from 2015 forward, and the capital allowances of €2,500 from 2014. These can be used against her profits in 2016.
In year 3, Sam will have €5,000 of capital allowances that she carried forward to set against any profits that arise in 2016.