HELP !! Preliminary Income tax for 2016

AgathaM

Hi, could help me to understand how to calculate preliminary tax for 2016 for someone who has joint assessment with husband.

I work as employee PAYE for 2015 and 2016 . My husband was self employed from June 2015 till July 2016. He was registered for Income tax for that period.

As per ROS calculation our total income for 2015 was 50030eur ( Me 24393 eur , husband 18404 self emplyed + 7233 eur as emplyee+ social welfare). ROS calculate income tax as 10006+USC+PRSI=12136 - Tax credits etc=3904 eur due to pay for 2015.

Could you tell me how much of preliminary tax I would have to pay for 2016, is it 90% of 3904. If so, is revenue preasuming that I work in 2016 and my PAYE income will be same like in 2015 , If I lost my job in 2016 , I feel I would be punished for paying an advance tax for 2016 while not working ? Thanks for answering

nompere

You don't have to pay any preliminary tax - you can just file a "nil" notice.

But if you end up with a tax liability for 2016 then Revenue will charge interest, on the shortfall, at approximately 10% pa, unless either:

a) You paid 100% of your liability for 2015, or
b) You paid at least 90% of the ultimate liability for 2016.

So most advisers advise people with ongoing liabilities to opt for the 100% of the previous year's liability, as it's certain. When sources of income cease we do our best to estimate the income that will arise for a year not then ended. It's not always straightforward.

In your case it's either pay €3904, and probably get a refund next year, or make your best estimate. Revenue don't really care what you do, but practitioners are increasingly seeing interest demands from the Collector General's office where preliminary tax was insufficient.

CIARAN_BOYLE

You can either pay the 20 liability again ie 3904 or 90% of what the 2016 return ends up as. Obviously you dont know that at the moment so unless you have a good idea what way it will go pay my advice is 3904.

Carawaystick

Do you not deduct the paye tax you've paid from any preliminary tax payment?

AgathaM

I did deduct PAYE and Tax credits.
I was paying on On the Revenue accounts some money for 2015 every so often, total I ve already paid is approx 3600 eur so no much balance to be paid when filing form 11 for 2015, the 2016 will be different story I think I will put 100% of 2015 tax for 2016 and will ask Revenue if I can pay 3900 by instalments I don't have enough to pay in bulk.