Revenue eBrief No. 149/20

06 August 2020

Income tax relief for self-employed individuals adversely impacted by Covid-19 restrictions

Section 10 of the Financial Provisions (Covid-19) (No. 2) Act 2020 provides for a number of temporary income tax measures to assist self-employed individuals who have been adversely impacted by the Covid-19 restrictions.

• Under the first measure, self-employed individuals can claim to have their 2020 losses and certain unused capital allowances carried back and deducted from their profits for the year of assessment 2019, thus reducing the amount of income tax payable on those profits. A €25,000 limit on the total amount that may be carried back will apply.
• The second measure allows for an acceleration of that relief by allowing self-employed individuals to make interim claims based on the estimated amount of relief available to them. 
• The third measure gives 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.   

Tax and Duty Manual Part 12-01-03 has been created to explain how the first and second measures will operate in practice. Tax and Duty Manual Part 23-01-34 “Averaging of Farm Profits” has been updated to include guidance on the income averaging measure for farmers.