Tax Calculation

brian076

Not sure if this is the right thread but I'll give it a go anyway. Just started a new business last January so I know that by 31st Oct next I'll have to pay preliminary tax for this year. I want to make sure that I pay the right amount and as such I'd like to put money aside each week so that I'm not looking for a lump sum at that time.

Being a new business I don't expect to make much of a profit in the 1st year, but I'd estimate that it might be about 20k. My wife is taking all the allowances as she's on PAYE, so do I pay 20% of 20k plus PRSI, income levy & health levy?
Any help would be appreciated.

jnh

Hi Brian

If you started in Jan 09 you wont be due to make a return until Oct 2011. Your first filing deadline is extended for an additional year when you start in business. However in Oct 11 you will pay tax for 09, 10 and preliminary for 11 so it is advisable to have some set aside.

The rate you are taxed at depends on your wifes income as you are taxed jointly.

The Revenue have tables and rates on their website which show the rates and cut off points.

If your wife has used up all the tax credits you will be taxed at the applicable marginal rate including levies and prsi with no deductions. See the Revenue website for tax cut off points etc.

Hope this helps!!

brian076

Thats great thanks a lot

greyc

jnh wrote: »

Hi Brian

If you started in Jan 09 you wont be due to make a return until Oct 2011. Your first filing deadline is extended for an additional year when you start in business. However in Oct 11 you will pay tax for 09, 10 and preliminary for 11 so it is advisable to have some set aside.

The rate you are taxed at depends on your wifes income as you are taxed jointly.

The Revenue have tables and rates on their website which show the rates and cut off points.

If your wife has used up all the tax credits you will be taxed at the applicable marginal rate including levies and prsi with no deductions. See the Revenue website for tax cut off points etc.

Hope this helps!!

I'm in a similar situation. I was s/e for 6 years, but ceased trading at the end of 2007 & notified revenue at the time. I was employed and on PAYE for all of 2008, but i've gone back to doing what I did previously this year. Would that be treated as starting up a new business or would revenue just treat it as a continuation.

Also what way is the Health Levy calculated. Someone told me that you only have to pay it if you earn over a certain amount, but I'm not sure if this relates to the PAYE sector or does it matter?

dbran

Hi Greyc

I believe if it is a similar trade then it would be treated as a continuation of trade and not a cessation. IT returns could be revised by revenue on this basis if it turns out that more tax is due.

When you cease to trade if you time the cessation right you can engineer a situation where a period of time/iincome falls out of assessment.

DB