The Back to Work Enterprise Allowance (BTWEA) scheme encourages people availing of certain social welfare payments to become self-employed.
Since May 2009, there are two streams of the Back to Work Allowance for people who wish to commence Self Employment.
1. Short Term Enterprise Allowance Scheme (STEA)
To qualify for this scheme:
- You need to have paid 104 PRSI contributions and have been awarded Jobseekers Benefit (JB)
- It is paid for the Duration of your JB – that is for 312 or 234 days and once your JB entitlement is exhausted so is your STEA.
- You cannot be either a fulltime or part-time employee while on STEA.
- If you previously were awarded the old Back to Work Enterprise Allowance, you can apply for STEA once you satisfy the conditions of the new scheme. If you qualify for STEA, you will not be eligible to apply for the BTWEA for 5 years.
- STEA is a taxable payment in the same way as JB. You are paid at the same rate as you would have been entitled to on JB until your JB entitlement expires. If you don’t apply for STEA until 6 months into your JB claim, then you will only get 6 months STEA. Obviously the earlier you are ready to start your business after becoming unemployed the better.
- To apply, you need to complete an application form, complete a business plan with a one year financial projection and register with the Revenue Commissioners. Project must be approved by either local Partnership Company or by the Job Facilitator. Employment can’t be seasonal, temporary or part-time.
- Once claim is awarded, customers payment is made into their Bank A/C and they are no longer required to sign on each month. As they are now self employed, they will be liable for class S PRSI. STEA is not payable to someone who is out of the country.
- If the business isn’t working out, the customer can re claim their JB if they haven’t exhausted entitlement. Or if their STEA is finished and they haven’t much income from the business, they may be able to sign for Jobseekers Allowance. This is a means tested payment so business income, spouse or partners income, and savings, etc will be taken into account.
- Customers may also be entitled to some financial support to help with the set up of the business. The maximum amount available is €1000 and can be used for training, equipment, advertising etc. The customer must pay 25% of the cost and the Department will pay 75% to a maximum of €1000 directly to the service provider. We cannot make payment to the individual. If support is required towards public liability insurance (which is the only type of insurance we can cover) the amount covered is 50% up to a maximum of €1,270.
2. Back to Work Enterprise Allowance Scheme
This strand is aimed at those who have been out of work for a longer period of time.
To Qualify you will either be:
- In receipt of JB or JA for 12 months – if you are on JB, you must establish an entitlement to JA and you are paid on this rate
- In receipt of One Parent Family Payment, Invalidity Pension, Disability Allowance, Carers Allowance, Widows Pension for 12 months
- In receipt of Illness Benefit for 3 years.
- Periods of time spent on CE, VTOS, Back to Education Allowance, JI, in prison, in receipt of Direct Provision can count towards qualifying period. We can also look at a persons claims over a longer period of time to see if they satisfy the qualifying period. We can also look at cases where there may have been a combination of different Social Welfare payments to see if people qualify.
- If you are a qualified adult on one of the qualifying payments for the required period of time, you can access the BTWEA once you establish an entitlement to your own Social Welfare payment.
- People who are working part-time and also signing on have to have claimed 312 days Social Welfare before they can access the scheme.
- Payment is for two years at the rate of the persons previous Social Welfare entitlement. IF they have been on a reduced rate, this is the rate they get on the BTWEA. The first year is at 100% and the second at 75%. BTWEA is not taxable but the income from S/E is. Participants pay class S (self employed) PRSI. Payment is made into Bank A/C and the person is no longer required to sign on.
- If the applicant is claiming for a qualified adult, who subsequently commences employment, the BTWEA rate remains unchanged. However is she claims SW or starts CE in her own right, then the rate will be adjusted.
- People who previously received BTWEA can requalify for the scheme once a period of 5 years has elapsed and once they satisfy the conditions for the new 2 year scheme.
- Secondary Benefits such as Fuel Allowance and Medical card are retained. If applicant is in receipt of Rent Allowance or Mortgage Supplement from the HSE, they should contact their local CWO to check the implications of commencing self employment on those supports.
- People who came on the scheme from illness payments may be able to revert to these payments during the life time of the BTWEA depending on their medical condition. People coming from Disability Allowance or Invalidity Pension who were entitled to the Household Benefits Package (telephone, ESB, gas) retain these for the duration of the scheme. People coming from Carers Allowance don’t.
- Applications and funding support as outlined for STEA.
The European Commission is providing co-funding to this scheme for participants under 25 years. The scheme is being backed jointly by the Youth Employment Initiative (YEI), the European Social Fund (ESF) and the Department of Social Protection on an equal funding basis. You may be contacted by the Department or its agencies for follow-up questions relating to ESF/YEI.