Irish Revenue has confirmed that the €4,000 Power Up Grant paid to businesses in 2025 is taxable income and must be included in the relevant corporation tax or income tax return. The clarification matters because the grant was widely communicated, including by government ministers, as a tax-free payment to help with running costs. Many of the eligible businesses that received the €4,000 have already spent it on energy bills, rent, supplier payments and wages, and have not set aside any tax against it. The cashflow gap that this creates is real, but it is fixable if you take action before your filing deadline.
This article explains why the grant ended up taxable, who it applies to, how to report it in your accounts and corporation tax return, and the practical steps to take if you have already spent the money.
Why is the Power Up Grant making headlines now?
The €170 million scheme was launched by the Department of Enterprise, Trade and Employment in 2024 and rolled out through local authorities under the broader Increased Cost of Business (ICOB) framework. The €4,000 top-up was targeted at the hospitality and retail sector, two of the most exposed parts of the small business economy in Ireland, and was promoted heavily as a direct cash injection to help businesses absorb energy, insurance, wage and supplier cost inflation.
The confusion stems from a mismatch between the political message and the tax treatment. Ministers and TDs talking about the scheme in 2025 repeatedly framed it as tax-free support. Revenue subsequently confirmed, in line with the long-standing tax treatment of revenue grants in Ireland, that because the grant was designed to cover operating costs rather than fund capital investment, it is taxable as trading income. For thousands of recipients in the hospitality and retail sector, that confirmation arrived after the money was already spent.
What is the Power Up Grant and who received it?
The Power Up Grant was a one-off €4,000 payment distributed through local authorities to small businesses that had registered for the earlier Increased Cost of Business (ICOB) scheme. Eligibility was tied to commercial rates valuation thresholds and to sector codes that covered hospitality, food service, and retail. Recipients were notified by email or through their local authority’s online portal and the payments landed in business bank accounts during 2025.
If you are a recipient, you should have the following documentation on file:
- The original ICOB confirmation from your local authority
- The Power Up Grant approval and payment confirmation, usually issued by email
- The bank transaction showing the €4,000 credit, with the originating reference from the local authority
- Any related correspondence about scheme conditions or follow-up requirements
Hold on to these documents; your accountant will need them to evidence the grant in your accounts and to deal with any Revenue query later.
Is the Power Up Grant taxable in Ireland, and why?
The short answer: yes. Revenue has confirmed that the €4,000 Power Up Grant is taxable as trading income for the period in which it was received. It increases your taxable profits for that period in exactly the same way as a sale or fee would, subject to your normal allowable expenses, capital allowances, and losses brought forward.
Is the grant revenue or capital for tax purposes?
Irish tax law makes a fundamental distinction between revenue grants and capital grants. A revenue grant supports your day-to-day operating costs (energy, rent, wages, supplies) and is taxed as trading income in the year it is received. A capital grant supports the purchase of long-lived assets like equipment, vehicles or buildings, and is generally either offset against the capital cost of the asset or spread over the asset’s useful life through reduced capital allowances. The Power Up Grant was explicitly designed to cover operating costs, so it falls firmly into the revenue category and is taxable.
This is the same treatment that applied to the Restart Grant, the Trading Online Voucher (where used for operating spend), and similar Covid-era and energy-cost support schemes. The political framing as “tax-free” was misleading, but the underlying tax treatment is consistent with how Revenue has handled this type of grant for decades.
How do you report the Power Up Grant in your accounts?
Most accountants will book the grant to an “Other income” or “Grant income” line in the profit and loss account, separated from trading revenue. This keeps the accounts clean and lets you (or a future reader of the accounts) see clearly how much of the year’s reported income came from grant support rather than customers.
The journal looks like this in practice:
- Debit: Bank account €4,000 (when the grant was received)
- Credit: Other income / Grant income €4,000
Once it is in the profit and loss, the grant flows through to the corporation tax computation as taxable income. You do not get to net it off against the specific bills you paid; the costs you paid (energy, rent, wages) are already deductible in their own right, and adding the grant simply increases the taxable result by €4,000 for the period.
How do you report the grant in your corporation tax return?
For limited companies, the grant is included in the profit figure that flows into the CT1 form filed through ROS. Specifically:
- Include the €4,000 in turnover or other operating income in the financial statements
- Confirm the figure feeds correctly into the taxable profit line in the corporation tax computation
- If you are entitled to Section 486C start-up relief, the grant may be eligible for shelter under that relief in the right circumstances; check with your accountant
- If you have losses brought forward, the grant can be absorbed by those losses before any tax is actually paid
For sole traders and partnerships, the grant is included in turnover on Form 11 (or Form 1 for partnerships) and is taxed at your marginal rate of income tax, USC, and PRSI. A sole trader on the top rate of income tax could be looking at an effective tax cost of around €2,000 on a €4,000 grant, which is why it is important to put aside the tax now rather than face it at filing time.
What if you have already spent the grant?
This is the situation most recipients are in, and it is solvable. The grant is taxable, but the tax is not due until your normal corporation tax or income tax filing date, which gives you between three months and 18 months of breathing room depending on your year-end. The practical steps:
- Talk to your accountant now. Get the grant booked correctly in your management accounts and the tax cost calculated
- Set up a tax savings sub-account. Move 12.5% of the grant (€500 for a limited company) into a separate account every month until your CT bill is paid. For a sole trader, set aside 30% to 50% depending on your marginal rate
- Check your projected full-year tax bill. If your profit has shifted materially because of the grant, you may need to make a preliminary tax payment higher than last year’s to avoid an underpayment charge
- Document everything. Keep the email confirmation, payment record, and any local authority correspondence in one folder for the file
- Do not amend a return that has not yet been filed. If your accounts are still in draft, simply incorporate the grant correctly before filing. Only file an amended return if you have already submitted with the grant missing
What about businesses that have already filed without including the grant?
If your accounts and tax return have already been filed for the period in which the grant was received, and the grant was not included as taxable income, you are likely looking at an amended return and a small additional tax payment plus interest. Revenue’s voluntary disclosure regime is designed for exactly this situation: a self-correction made before any audit or enquiry is significantly cheaper than a correction prompted by a Revenue letter.
Talk to your accountant about a Level 2 voluntary disclosure, which still attracts interest but typically reduces or eliminates penalties when the disclosure is timely. The longer you leave it, the more interest builds and the higher the risk of a routine cross-check between local authority records and your filed return flagging the gap.
What lessons does this hold for future grants?
The Power Up confusion is not the first time a politically promoted “tax-free” support has turned out to be taxable, and it will not be the last. A few practical principles apply to any grant your business receives:
- Treat every grant as taxable until your accountant confirms otherwise
- Set aside the projected tax cost in a separate account on the day the grant lands
- Keep the application, approval, payment, and any conditions in one documented place
- Ask whether the grant is revenue or capital in nature, because the tax treatment differs
- If the answer is unclear, request Revenue’s published guidance on the specific scheme
Capital grants for equipment or premises usually reduce the cost of the asset for capital allowance purposes; revenue grants for running costs add to taxable income in the year received. Knowing which category you are in stops the surprise after the fact.
If you received the Power Up Grant and you want a second pair of eyes on how it should sit in your accounts and your tax return, that is exactly the type of work we are doing for clients across the hospitality and retail sector right now. Get in touch with Kinore and we will run through your specific position, calculate the tax cost, and tell you what to set aside before the filing deadline.
Frequently asked questions
When does the tax on the Power Up Grant need to be paid?
It depends on your year-end. For limited companies, corporation tax is due nine months after the end of the accounting period in which the grant was received, alongside the CT1 return. For sole traders and partnerships, the grant is included in turnover on Form 11 and is paid by 31 October (or mid-November via ROS) of the year after the tax year in which it was received.
Can I offset the grant against the costs it paid for?
No, not in the way you might think. The energy bills, rent, wages and supplier payments the grant was used for are already deductible in your accounts as normal trading expenses. The grant adds €4,000 to your taxable income on top of those costs being deducted. You do not get a second deduction for the spending the grant funded.
What if my business made a loss for the year?
The grant still counts as taxable income, but it can be absorbed by current-year losses, prior-year losses brought forward, or group relief where applicable. In a loss-making year the grant may not generate any immediate tax cash payment, although it will reduce the carried-forward losses available for future years.
Was every business that received the grant in the same sector?
The Power Up Grant was targeted at the hospitality and retail sector, but eligibility was determined by commercial rates valuation thresholds and sector codes through the local authorities rather than by sector name. Some food service, accommodation and similar businesses qualified, while others in adjacent sectors did not, depending on the specific eligibility criteria of the ICOB scheme.
Will future Power Up style grants be taxable too?
Almost certainly, unless legislation specifically provides otherwise. The default tax treatment in Ireland is that any grant supporting day-to-day running costs is taxable as trading income. Tax-free grants exist (for example, certain employee assistance schemes), but a grant promoted in 2025 as “tax-free” should not be assumed to be so without checking Revenue’s published guidance on the specific scheme.
The information provided in this article is for general guidance and informational purposes only. It does not constitute professional accounting, tax, or financial advice, and should not be relied upon as a substitute for advice tailored to your specific circumstances. While we take care to ensure the content is accurate and up to date at the time of publication, legislation, tax rates, thresholds, and compliance requirements in Ireland can change.
