Preliminary Tax Questions

Miss OMMC

Hi there,

I'm filing my partners tax returns and I'm looking for some help.

Last year we set up a direct debit instruction through ROS to pay prelim tax for 2015 over 12 months. The first payment was taken in Jan 2016 so to date; 10 of the 12 payments have been paid with the remaining two to be paid in Nov and Dec.

These 12 payments 100% cover our tax liability for 2015.

I'm a bit confused about what we need to pay now. As there are still two payments outstanding (Nov and Dec), do we have to pay the outstanding balance before the cut off date? Can I amend the direct debit instruction to continue to pay prelim tax for 2016?

exaisle

I'm sorry but i have a bit of bad news for you...

Payments taken by Revenue by direct debit in 2016 only count towards the 2016 tax liability. To guarantee payment of your 2015 liability you should have started paying in January 2015, or if you started later, the payments should have been increased so that by December 2015 you had the correct amount paid.

So, effectively, you will owe all of your 2015 liability but will have preliminary tax paid for 2016.

If you can't pay all of the 2015 liability, be sure that you file the return before 31st October as the extension to 12th November only counts for those people who can pay and file (ie. pay their entire liability when they submit their return) and you don't want to incur a late filing penalty.

Miss OMMC

Oh great! ...So we've paid zero preliminary tax for 2015...but our prelim for 2016 should be covered?

Would we be penalized for not paying any preliminary tax for 2015?

Thanks for your advice, I really appreciate it!

ebbsy

Revenue have been hitting people who did'nt fulfill the 90%/100% rule last year...

Appeals ain't working either.

yzmnzr123

Do a PAYE employee need to pay preliminary tax?

leandrolorenzi

I registered as a Sole trader in Nov 2015.
My understanding is that I could choose my 'accountancy period' covering just the last two months of 2015 (Nov and Dec) , or even starting from Nov 2015 til Oct 2016, having to submit my first Tax Returns by Oct 2017. Is that correct?
Do I owe any preliminary tax?

Aside of that in 2015 I also had a small income through Airbnb, that I want to declare. Does this income fall into my overall tax return for 2015,and so I have until Oct 2017 to submit for it?

exaisle

leandrolorenzi wrote: »

I registered as a Sole trader in Nov 2015.
My understanding is that I could choose my 'accountancy period' covering just the last two months of 2015 (Nov and Dec) , or even starting from Nov 2015 til Oct 2016, having to submit my first Tax Returns by Oct 2017. Is that correct?
Do I owe any preliminary tax?

Aside of that in 2015 I also had a small income through Airbnb, that I want to declare. Does this income fall into my overall tax return for 2015,and so I have until Oct 2017 to submit for it?

This has been asked (and answered)elsewhere in this forum...

exaisle

yzmnzr123 wrote: »

Do a PAYE employee need to pay preliminary tax?

No. Unless they have non-PAYE income in addition to their PAYE income.

exaisle

Miss OMMC wrote: »

Oh great! ...So we've paid zero preliminary tax for 2015...but our prelim for 2016 should be covered?

Would we be penalized for not paying any preliminary tax for 2015?

Thanks for your advice, I really appreciate it!

If you paid the entire liability for 2015 on or before November 12th, you certainly won't be penalised. Revenue may decide to charge you interest but given that you've paid 2016 Preliminary Tax, I'd be mildly surprised if they pursued you for interest. However, that's not to say they won't.