Having recently come into some money, I have identified a very attractive BES investment. However, I won't "earn" enough PAYE income in 2007 to get the full tax relief. Can the relief be applied to previous or future years ?
You can pick a start date from any point in the previosu 6 years, and get a rebate on tax paid on the gross amount of the investment from the start of that point. For example, if you have, say 100k to invest and you will earn 40k gross this year, but earned 30k last year and the year before, you can apply for BES from the beginning of 2005, and thus reclaim all the tax paid on the 100k gross earned over the three years.
That's my understanding - you are investing in a new business, but tax relief is backdated to a point you choose, once it is within the last 6 years.
Have a look at the revenue leaflet on BES:
[broken link removed]
The figures have changed in the budget, so they have not updated the leaflet since, but the general process is described in it so have a look
It allows the individual to obtain income tax relief on investments up to a maximum
of €31,750 per annum in each tax year up to 2006. Relief is available at the investor's
highest rate of income tax. An investor who cannot obtain relief on all his/her
investment in a year of assessment, either because his/her investment exceeds the
maximum of €31,750 or his/her income in that year is insufficient to absorb all of it,
can carry forward the unrelieved amount to following years up to and including 2006,
subject to the normal limit of €31,750 on the amount of investment that can be
relieved in any one year.
from looking at this document, even though its out of date, it looks like you can only get relief going forward, not actually backwards for 6 years. The document does make reference to to the Seed Capital Scheme which is different as it allows someone setting up a company to claim back 6 years tax relief on any investment they make in their own company...
The Finance Act 1993 and subsequent Finance Acts have widened the scope of the BES
to provide a refund of tax already paid by an individual who sets up and takes
employment in a new qualifying business. This relief is known as the Seed Capital
Sorry!! I was referring to Seed Capital as this was what I was investigating a few months ago when setting up my business. Apologies for the wrong steer.
But you don't lose the relief on BES if your income is not sufficient to absorb it - you can carry it forward into following years