RCT + Preliminary Tax

matomask

HI All,

I have a question I cannot get my head around. I can't find any answers online.
I am a self employed construction worker, and all my jobs go through RCT as I am always the subcontractor (ALWAYS), so basically all the tax is paid directly by my main contractor.This means that when I have to do my Income Tax Return (form 11) everything has already been paid. My question is, do I have to pay preliminary tax for this year? Under the Tax Liability section in my Form 11 for last year states 0 as it was already paid by my main contractor.

Thanks in advance,

Matt

relax carry on

matomask wrote: »

HI All,

I have a question I cannot get my head around. I can't find any answers online.
I am a self employed construction worker, and all my jobs go through RCT as I am always the subcontractor (ALWAYS), so basically all the tax is paid directly by my main contractor.This means that when I have to do my Income Tax Return (form 11) everything has already been paid. My question is, do I have to pay preliminary tax for this year? Under the Tax Liability section in my Form 11 for last year states 0 as it was already paid by my main contractor.

Thanks in advance,

Matt

Normally subcontractors are on a zero rate deduction for RCT if all is order. 20% or 35% means something is wrong.

https://www.revenue.ie/en/self-assessment-and-self-employment/rct/rct-for-subcontractors.aspx

If you are having tax withheld then something is not quite right. Are you at the 20% or the 35%?

That RCT tax is just a with holding tax on the payment which may be more than, less than or equal your final liability. You won't know until you have drawn up your accounts and filed your form 11.

The preliminary tax has is its own rules.

https://www.revenue.ie/en/self-assessment-and-self-employment/guide-to-self-assessment/what-is-preliminary-tax.aspx

matomask

Thanks for the reply relax_carry_on.
Yes I am on 0% at the moment, I was in 20% when I started working in November last year. I asked for revision and finally I had it down to 0% around June this year.
Now, I'll explain my situation a bit better so you can see the whole picture. I came to live to Ireland in November 2017 so I had no previous tax history in the country. This year I filed 2017th form 11 for those 2 months (Nov and Dec 2017) in which I had 20% RCT. That's the ONLY income I had in Ireland in 2017. So how do I know how much preliminary tax should I pay now? If in the form 11 I filed the Net Tax Liability says 0? Or should I pay the amount equal to the RCT I had deducted in 2017?

Thanks again,

Matt

relax carry on

matomask wrote: »

Thanks for the reply relax_carry_on.
Yes I am on 0% at the moment, I was in 20% when I started working in November last year. I asked for revision and finally I had it down to 0% around June this year.
Now, I'll explain my situation a bit better so you can see the whole picture. I came to live to Ireland in November 2017 so I had no previous tax history in the country. This year I filed 2017th form 11 for those 2 months (Nov and Dec 2017) in which I had 20% RCT. That's the ONLY income I had in Ireland in 2017. So how do I know how much preliminary tax should I pay now? If in the form 11 I filed the Net Tax Liability says 0? Or should I pay the amount equal to the RCT I had deducted in 2017?

Thanks again,

Matt

Your preliminary tax due for 2018 is either 90% of the tax due for 2018 or 100% due for 2017.

Only you'd know at this stage what income tax, USC and PRSI you are likely due to pay for the 2018 tax year.

100% of last year's tax is whatever the overall tax due for 2017 was. The RCT witheld is only a payment method. I'm assuming since you were only taxed on 2 months of the year you had either no tax liability at all and all the witheld RCT was refunded to you or you only had a small liability to pay which was offset by the witheld RCT with the remainder refunded to you. Either way your 100% of last year should be zero or vey minimal unless you were earning some serious income for those two months.

matomask

relax carry on wrote: »

Your preliminary tax due for 2018 is either 90% of the tax due for 2018 or 100% due for 2017.

Only you'd know at this stage what income tax, USC and PRSI you are likely due to pay for the 2018 tax year.

100% of last year's tax is whatever the overall tax due for 2017 was. The RCT witheld is only a payment method. I'm assuming since you were only taxed on 2 months of the year you had either no tax liability at all and all the witheld RCT was refunded to you or you only had a small liability to pay which was offset by the witheld RCT with the remainder refunded to you. Either way your 100% of last year should be zero or vey minimal unless you were earning some serious income for those two months.

That's right, my 100% of last year is indeed 0. So what should I do in that case? Don't pay? Or calculate the 90% of this year's and pay that amount?

relax carry on

matomask wrote: »

That's right, my 100% of last year is indeed 0. So what should I do in that case? Don't pay? Or calculate the 90% of this year's and pay that amount?

Up to you what you want to do. Paying 90% now means you've already met most of your tax liability for 2018 when it comes to filing your return next year. Remember you will also have preliminary tax to pay next year for 2019 so you run the risk of paying all of 2018's liability and 2019's preliminary tax together which could be a significant amount.