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Sole Trader Tax Question

  • 15-10-2012 12:38pm
    #1
    murt6295
    Registered Users, Registered Users 2 Posts: 2 ✭


    Hi Everyone,

    Hopefully someone can help me. I just want to double check something with those of you in the know.

    My brother has commenced trading as a sole trader from Jan 1st 2012. I have been helping him along with VAT returns etc which have been processed and paid up to date.

    Am I right in saying, he has to pay no income tax until next October (2013) or does he have to pay a preliminary amount for the current year this Oct?


    Many thanks in advance

    Murt6295


Comments

  • #2
    viztopia
    Closed Accounts Posts: 770 ✭✭✭viztopia


    murt6295 wrote: »
    Hi Everyone,

    Hopefully someone can help me. I just want to double check something with those of you in the know.

    My brother has commenced trading as a sole trader from Jan 1st 2012. I have been helping him along with VAT returns etc which have been processed and paid up to date.

    Am I right in saying, he has to pay no income tax until next October (2013) or does he have to pay a preliminary amount for the current year this Oct?


    Many thanks in advance

    Murt6295
    Technically he doesn't have to pay any but if he is making a profit it help to pay some preliminary tax now as it will take the pain out of it next year when you would have to pay the 2012 tax liability plus prelim for 2013.


  • #3
    murt6295
    Registered Users, Registered Users 2 Posts: 2 ✭murt6295


    viztopia wrote: »
    Technically he doesn't have to pay any but if he is making a profit it help to pay some preliminary tax now as it will take the pain out of it next year when you would have to pay the 2012 tax liability plus prelim for 2013.

    That's what I thought. Thank you, I was getting a little worried!


  • #4
    noeleenred
    Registered Users, Registered Users 2 Posts: 152 ✭✭noeleenred


    Taken from the revenues website, see link below

    Making Payments under Self-Assessment for the first time
    If you chose the option to pay Preliminary Tax of 100% of the previous year's liability, a payment of Preliminary Tax may not generally be required for the first year in order to avoid interest charges. However, if you do make a payment of Preliminary Tax in the first year, this will reduce the amount and number of tax payments that you will be required to make subsequently. If, for example, your tax affairs for the previous tax year were dealt with under PAYE and you commence as a self-employed person in the current tax year, you can make a payment of Preliminary Tax on 31 October of the current year.

    http://www.revenue.ie/en/tax/it/leaflets/it10.html#section4


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