I read that under the July Stimulus package businesses and the self-employed that were profitable last year, but made a loss this year, may be able to get a tax refund. How does this work?
It was announced in the July Stimulus that business and the self-employed can carry back 2020 losses against 2019 profits. This is a particularly significant measure as it could lead to a tax refund and assist with any cashflow issues.
A new temporary loss relief scheme has been introduced for self-employed sole traders.
When self-employed individuals are completing their 2019 Tax Return they can carry back a maximum of €25,000 of 2020 losses (and certain capital allowances) to reduce their 2019 taxable profits.
Where 2020 accounts are not yet finalised individuals can carry back estimated losses in order to get some relief against 2019 profits, subject to certain conditions being met.
This will allow the self employed to reduce their 2019 tax liability and may well result in a refund being triggered if, for example, you have overpaid 2019 preliminary tax or already filed and paid your 2019 tax return in full.