Preliminary Tax is an estimate of the tax that you expect to pay for the year. Our clients have asked us the following questions on several occasions. What exactly is this payment for? What happens if I don’t pay? And when is Preliminary Tax due to be paid?
We have outlined below some details which we hope answers these questions.
What exactly is this payment for?
All taxpayers, whether a self-assessment individual or a company, are liable to pay it and it is paid in advance of the relevant tax year.
Preliminary Tax is calculated on either:
- 100% of your previous year’s liability, OR
- 90% of your current year liability, OR
- 105% of your pre-preceding year’s liability.
As estimating the current year’s liability can be both time-consuming and costly the majority of clients opt to pay 100% of the previous year’s liability.
What happens if I just don’t pay?
If you fail to return and pay your Preliminary Tax by the due date then you are liable to a series of penalties, interest and surcharges. The interest alone is charged at a daily rate of 0.0219%, and in addition to this a surcharge of 5% – 10% of the liability may be applied.
When is Preliminary Tax due to be paid?
Preliminary Tax is due to be paid as follows:
For example, self-assessment taxpayers are required to file and pay their Income Tax and Preliminary Income Tax liabilities as follows:
|Income Tax Year ending 31st December 2018||File and Pay your Income Tax by 31st October 2019|
|Preliminary Tax for 2019||File and Pay Preliminary tax by 31st October 2019|
The above deadline may be extended if you opt to file and pay using Revenue’s Online System (ROS). In 2019 the extended deadline is 12th November 2019.
The Preliminary Tax return and payment, for companies, is due 11 months after your accounting year end. For example, if the accounting year end is 31st December 2018:
|Accounting Year-end||31st December 2018|
|Corporation Tax Deadline||23rd September 2019|
|Preliminary Tax Deadline||23rd November 2019|
Even if you did not have a tax liability you will still be required to file a Nil Preliminary Tax Declaration on ROS.
If you are unsure about your tax obligations, or require assistance calculating your liability, please do not hesitate to Contact us.