With the deadline looming for filing Income Tax Returns many people may be confused by the need to pay Preliminary Tax. Preliminary Tax is your estimate of Income Tax and related charges payable by you for the following tax year. Essentially when you file and pay your income tax liability for 2017 you must also make a payment on account for 2018. Your Preliminary Tax payment covers your liability to PRSI and Universal Social Charge, as well as Income Tax.
To avoid interest charges, the amount of preliminary tax paid for a tax year must be equal to or exceed the lower of:
1. 90% of your final liability for the tax year, or
2. 100% of your final liability for the previous tax year, or
3. 105% of your final liability for the pre-preceding tax year. (This option is only available where preliminary tax is paid by direct debit and does not apply where the tax payable for the pre-preceding year was nil).
(This article by Casey Stephenson Accountants appeared in Tralee Outlook on Thursday 1st November 2018)