October 31st

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Income Tax & Preliminary Tax

Should I be Income Tax Registered?

You should register for Income Tax if;

  • You are self-employed
  • In receipt of additional income outside of PAYE, exceeding €5,000
What is Preliminary Tax and do I have to pay it?

Preliminary Tax is an estimate of the income tax due for a tax year. This is paid in advance of filing your income tax return for that year. This is due by 31st October of that tax year.

Preliminary Tax due is;

  • 90% of the tax due for that year
  • 100% of the tax due for the previous tax year
  • 105% of the tax due for the tax year preceding the previous year but only applicable if currently paying by direct debit.

For example, Preliminary Tax due for the year 2020 is due to be paid by 31st October 2020. This can be submitted when filing your 2019 Income Tax Return. Underpayment or late payments of Preliminary Tax may be charged interest for each day past the deadline.

Pay and File System – how does this work?

By the 31st October each year, you must;

  • Pay your Preliminary Tax for that year i.e 2020
  • File your Tax Return for the previous year i.e 2019
  • Pay any balance of tax due for the previous year i.e 2019

The pay and file deadline is extended into November for returns filed online through Revenue Online Services (ROS). Late filing of tax returns will incur surcharges of 5% of tax due within 2 months of filing or 10% of tax due thereafter.

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Why you should file your Tax Return early

The 31st October Income Tax Return deadline….. is just that…. a deadline and not a target!

Your tax return can be filed at any time between 01st January – 31st October.

Here are 5 reasons why you should file your Tax Return early this year

1. Plan Ahead

If you file your return and are due to pay a liability, this is due by 31st October. Therefore, if your liability is calculated in advance, it gives you time to prepare and budget.

2. Less Stress

Submitting your paperwork to your accountant early means there is less pressure on both sides to complete and file your return on time. Giving your accountant more time to prepare and review your return.

If your paperwork is received late or too near the deadline, your accountant may not be able to guarantee filing it on time.

3. Avoid Surcharges

If your return is filed after the deadline of 31st October you will be subject to surcharges and interest owed. You also run a higher risk of being selected for an audit.

4. More efficient

The longer you leave your return nearer the deadline, the busier Revenue will be. If you are due a refund, the sooner you apply for this the better as you may need to wait a lot longer once we approach 31st October deadline due to the volumes of returns Revenue need to process.

5. Peace of mind

Being more organised and submitting your return early, gives you that peace of mind that you have completed your tax obligations and won’t have that rush in October.

Need to file your Income Tax Return and not sure where to start? Contact us now 01 539 7999
Why not read some of our previous blogs here

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Getting tax back on your Pension Lump Sum

As the October 31st tax deadline races towards us, you may want to consider topping up your pension, as this is the deadline for claiming any tax relief this amount for the 2017 tax year.

You can make lump sum payments to your private pension or an AVC (Additional Voluntary Contribution) to your occupational pension.

If you ‘top up’ your pension by 31st October 2018, you are entitled to claim tax relief on that ‘top up’ amount against the tax paid in 2017.

Let us show you an example;

Ann ‘tops up’ her pension €1,000
Ann claims tax relief on €1,000 @ her marginal rate (40%) €400

In the above example, Ann has ‘topped up’ her pension by €1,000 but the real cost to her was €600 as she claimed back €400 tax relief.

Remember

Your pension ‘top-up’ needs to be paid by 31st October and your return completed.

 

Should you have any queries on this issue, please contact us on 01 5397999 or request our application form here

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