Can I pay 2014 tax now? Self employed and employed same year

Quibbler

Hi all,

I've been working self employed since January- but I still haven't paid any preliminary tax! I know I was supposed to but I kept putting it off as it was difficult to work out how much it would be since it's an estimate! I'm now about to finish this self employment and I now want to get my head around paying taxes as I'll soon be starting a new job where I will be a PAYE employee!

I'm wondering, now that i am finishing the self employment can I just self assess myself for 2014 and pay revenue my tax owed or do I have to now wait until August/October 2015 to pay this tax since I never paid the prelim tax??

I'm going to give it a go at working out my own taxes as I was always pretty good with finances/maths etc. and think I've got my head around what rates I've to pay.



Oh also wondering- I'll be working as a PAYE employee for about 3-4 months in the year, am I still entitled to the full PAYE tax credit? Or does it get split up since I haven't been employed all year??

Thanks!

mozattack

Technically you dont have to pay prel tax in the first year for commencement cases provided this is your first year being a chargeable person, i.e. requiring an income tax registration.

This means you can sit tight and not pay the tax until filing the return next October (Oct 2015).

However I rarely recommend this unless the cash is needed for cashflow purposes so Id recommend doing your tax early in the New Year and paying the Collector General with the Form 11 submission to follow.

Either way you can't pay it accurately now as you dont know what the rest of your year's income will be (could lose join, demotion, promotion, etc)

Quibbler

Oh great so I actually don't have to do anything until January then?? Ok phew that's a weight off my mind as I've enough to keep me busy starting a new job!

Can I just confirm something- technically I was self employed in 2011 doing this same job too. Then finished that around sept 2011 and became self employed again in jan 2014 until now- so is that rule where technically I don't have to pay prelim tax ok even though I did have a similar situation a few years ago?

Thanks so much for the advice!

Johnny Be Goode

Assuming that you are registered for income tax for 2014 you can of course pay Revenue your initial estimate of income tax due on the self employed income. Depending on your circumstances there may be a top-up payment required for 2014 later or a refund claimed if you paid too much. If you are registered for 'ROS' which I assume you are, whatever payment that you want to make can be done on-line.

Some people like to pay it while they have it (in 2014) so that there are no nasty tax surprises in 2015! Some hold off for cash-flow reasons.

You could pay say 30% of your self employed income now and square it off after you file your 2014 tax return.

You might also consider getting your tax credit certificate for your new employment on a 'Week 1' basis thereby leaving some credits and standard rate cut off points as a cushion against self employed income. Revenue might insist on that anyway when you apply for tax credits etc for your new employment once they see that you were self employed for the first half of the year or so.

So long as your PAYE salary is over €8,250 you should get the whole PAYE credit in the tax year assuming of course that you are tax resident in Ireland in 2014.

Hope you kept receipts for all self employed income expenses and don't forget to de-register from income tax once all taxes and returns are filed for 2014

Quibbler

Johnny Be Goode wrote: »

Assuming that you are registered for income tax for 2014 you can of course pay Revenue your initial estimate of income tax due on the self employed income. Depending on your circumstances there may be a top-up payment required for 2014 later or a refund claimed if you paid too much. If you are registered for 'ROS' which I assume you are, whatever payment that you want to make can be done on-line.

Some people like to pay it while they have it (in 2014) so that there are no nasty tax surprises in 2015! Some hold off for cash-flow reasons.

You could pay say 30% of your self employed income now and square it off after you file your 2014 tax return.

You might also consider getting your tax credit certificate for your new employment on a 'Week 1' basis thereby leaving some credits and standard rate cut off points as a cushion against self employed income. Revenue might insist on that anyway when you apply for tax credits etc for your new employment once they see that you were self employed for the first half of the year or so.

So long as your PAYE salary is over €8,250 you should get the whole PAYE credit in the tax year assuming of course that you are tax resident in Ireland in 2014.

Hope you kept receipts for all self employed income expenses and don't forget to de-register from income tax once all taxes and returns are filed for 2014

Wow thanks so much guys- really appreciate all the info! I'll probably hold off and pay all tax in January- I've put the money set aside in another account so I won't be tempted to spend it- but since I'll be very busy starting new job etc I think I'd be better off doing it all in January.

Thanks for the advice re the paye tax credit, I'd never heard of the 'week 1' basis so I'll look into that some more.

When you say as long as my salary is above 8250, do u mean so long as I earn at least that in the 4 months I'm working in paye employment or do you mean what my future salary per year will be? My estimate is that I'll have earned about 9000 for sept-dec but my start date is not fully confirmed yet so this amount may be slightly less if I start later than expected.

Johnny Be Goode

Quibbler wrote: »

Wow thanks so much guys- really appreciate all the info! I'll probably hold off and pay all tax in January- I've put the money set aside in another account so I won't be tempted to spend it- but since I'll be very busy starting new job etc I think I'd be better off doing it all in January.

Thanks for the advice re the paye tax credit, I'd never heard of the 'week 1' basis so I'll look into that some more.

When you say as long as my salary is above 8250, do u mean so long as I earn at least that in the 4 months I'm working in paye employment or do you mean what my future salary per year will be? My estimate is that I'll have earned about 9000 for sept-dec but my start date is not fully confirmed yet so this amount may be slightly less if I start later than expected.

Once you have €8,250 (gross) or more in total for the whole tax year from an employment income subject to PAYE, and you are tax resident in Ireland then you will get full PAYE tax credit of €1,650 i.e. €8,250 x 20% = €1,650 . If you earned only €5,000 (gross) the PAYE tax credit would be €5,000 x 20% = €1,000 etc etc

Quibbler

Johnny Be Goode wrote: »

Once you have €8,250 (gross) or more in total for the whole tax year from an employment income subject to PAYE, and you are tax resident in Ireland then you will get full PAYE tax credit of €1,650 i.e. €8,250 x 20% = €1,650 . If you earned only €5,000 (gross) the PAYE tax credit would be €5,000 x 20% = €1,000 etc etc

Great thanks so much- that makes sense now!

I actually have one further question that is be so grateful to get other peoples opinions on!
Obviously it's all estimates at this stage but I'm estimating that I have approx 18500€ from self emp and about €9000 from employment for all of 2014. Obviously the paye tax credit will only be used with my income from employment but I'm considering using all of my single person personal tax credit solely for tax from my self employed income.
What would be your opinion on this? Or would you recommend splitting the personal credit between both sources of income? The way I see it is apart from USC an PRSI, I won't actually have much tax to pay on the employment income since it will only be approx €1800 minus my paye tax credit 1650.

Thanks again