Over the next few months we will be examining the government’s current ‘Action Plan for Jobs 2012’ in depth and the different aspects of the plan that should help to stimulate employment in the Irish economy. This is the government’s solution of tackling the unemployment crisis in Ireland at the moment with their main objective being to have 100,000 more people working in Ireland by 2016.

This week we are looking at two parts of the strategy – The Seed Capital Scheme and the Three Year Corporate Tax Exemption – two areas that are especially beneficial to small businesses.

This Scheme means that if you start up and work full time in your own company you can claim back income tax that you paid in the previous six years to invest back into the company. The scheme has been opened up to a much wider range of industry sectors and the ceiling on the recoverable tax can now be up to €100,000 in each of the previous six years. The amount of relief is restricted by the amount of investment. Some of the investment can of course be used to create jobs within the company.

In the first 3 years of trading for new-start-up companies, there will be relief from Corporation Tax and certain other gains. Where total corporation Tax Liability does not exceed €40,000 in the company’s first 3 accounting periods there will be full relief on income and gains relating to the trade. Where the tax liability falls between €40,000 and €60,000 the relief will be marginal. Savings made from these exemptions could be used to create an extra job within the company.

In the next instalment in our series looking at the government’s Action Plan for Jobs 2012 we will be scrutinising two more aspects of the proposal – the R&D Tax Credit up to €100,000 and the PRSI Exemption Scheme.