Back to Work Enterprise Allowance and the grant that goes with it

What the allowance does

The Back to Work Enterprise Allowance is run by the Department of Social Protection for people moving from a qualifying welfare payment into self-employment.

It removes the problem that used to stop people from trying. Starting a business typically ends your entitlement, meaning giving up a certain income for an uncertain one at exactly the moment you can least afford it. The allowance holds the income steady while the business gets going.

What you keep

Two years, on a taper. The government's operational guidelines set it out:

• Year one: 100% of your qualifying payment.

• Year two: 75% of it.

The percentage applies to your payment, including increases for dependants in most cases, though some claim types are treated differently: the operational guidelines set out the detail. Across the two years that comes to 624 paid days.

You keep it alongside whatever the business earns, which is the point of the design. Secondary benefits can continue in certain circumstances too, subject to their own conditions.

Who qualifies

The general position is that you need to have been getting a qualifying social welfare payment for at least nine months (234 days). Several situations change that, and Citizens Information lists the qualifying periods in full.

Worth knowing before you assume you are out:

• Breaks for Maternity or Paternity Benefit do not necessarily break your qualifying period, provided you were on an eligible payment before and after.

• Time on Supplementary Welfare Allowance or in Direct Provision can count, where you had an entitlement to a qualifying payment beforehand.

• Recent unemployment in another European Union country can be counted for someone now unemployed in Ireland.

• People released from prison may qualify, where an entitlement is established before becoming self-employed.

• A qualified adult can sometimes take up the allowance in place of the claimant.

Former participants can apply again after a gap of at least five years.

If you are on Jobseeker's Benefit instead

The Short-Term Enterprise Allowance covers people who qualify for Jobseeker's Benefit and want to start a business without waiting.

There is no qualifying period. The trade-off is duration: it runs for as long as your Jobseeker's Benefit entitlement would have lasted, rather than a fixed two years.

The grant that comes with it

The Enterprise Support Grant only opens once you have been approved for the allowance, which is why it is easy to miss.

It pays up to €2,500 in any 24-month period towards business costs. You must fund at least 10% of any item yourself, and for many cost categories the required contribution is 20%. A €1,000 laptop could draw €800 to €900 from the grant, depending on the category.

It covers practical start-up costs rather than living expenses, and the National Enterprise Hub sets out the current terms.

What the money does not cover

Neither scheme carries any of your business risk. They fund the start; they do nothing about what happens if a client claims against you.

Ireland does not generally require sole traders to insure. In practice, the requirement arrives from clients, landlords and site operators, who often want proof of cover at a stated limit before work begins. Since grant-funded equipment is usually the first real asset a new business owns, it is worth thinking about cover at the same time as the grant application rather than a year later. The covers clients most often ask for are public liability and professional indemnity, both explained at the end of this guide.

How to apply

Start at your local Intreo Centre or social welfare branch office, or with the Local Development Company for your area. You will need a business plan, which they can help you shape.

Two sequencing points that cost people money:

• Get written approval before you start trading. The scheme requires it. And because it is non-statutory, existing by government decision rather than legislation, there is no appeal to the Social Welfare Appeals Office if the order goes wrong.

• Get approved before you buy. The Enterprise Support Grant only opens once the allowance is approved, and money spent before approval usually cannot be claimed back.

Ready to apply? You can find the official application form for the Back to Work Enterprise Allowance here.

Insurance for sole traders in Ireland

Insify offers business insurance for self-employed people and sole traders in Ireland:

• Public liability insurance is for claims that your work injured someone or damaged their property.

• Professional indemnity insurance is for claims that your advice or your service cost a client money.

You arrange cover online and can share proof of it with a client who asks.

Insify is an insurance intermediary. This article is general information about State supports in Ireland and is not tax, legal or financial advice. Scheme rates and conditions change, so check the gov.ie and Citizens Information pages linked above for the current position. What a policy covers, along with its limits, conditions and exclusions, is set out in the policy documentation, which you should read before taking out cover.