1st Year Self Employed...

Banjaxed82

I'm sure this is well worn ground, but just looking to get 2 questions answered, as I'm reading too much confusing/conflicting info.

I was a PAYE worker for 6 years until May of this year. I have been self employed (sole trader) since then.

The questions:

1.) Am I right in saying I do not file my first tax return until October 2019?

2.) When it comes to paying my 'preliminary tax', as I was not self employed last year, can I put "zero" down for this?

Any clarification would be much appreciated! Thanks

gerrybbadd

Banjaxed82 wrote: »

I'm sure this is well worn ground, but just looking to get 2 questions answered, as I'm reading too much confusing/conflicting info.

I was a PAYE worker for 6 years until May of this year. I have been self employed (sole trader) since then.

The questions:

1.) Am I right in saying I do not file my first tax return until October 2019?

2.) When it comes to paying my 'preliminary tax', as I was not self employed last year, can I put "zero" down for this?

Any clarification would be much appreciated! Thanks

1) Correct

2) Preliminary tax is paid for the year AHEAD.

Banjaxed82

gerrybbadd wrote: »

2) Preliminary tax is paid for the year AHEAD.

And this figure is based on what? On the profit you think you might earn?

I thought it had something to do with tax paid in previous year(s)?

Gaillimh1976

Banjaxed82 wrote: »

And this figure is based on what? On the profit you think you might earn?

I thought it had something to do with tax paid in previous year(s)?

In theory yes


In reality they will accept 100% of last year's tax bill or 90% of next year's tax bill


So you can pay Zero this year, but you will effectively have a double bill next October so start budgeting for that

Banjaxed82

Gaillimh1976 wrote: »

In theory yes


In reality they will accept 100% of last year's tax bill or 90% of next year's tax bill


So you can pay Zero this year, but you will effectively have a double bill next October so start budgeting for that

I get you. Thanks for that.

marko99

Some advice based on my own experience:

1. Do a back of the envelope calculation now to see what you think your liability for 2018 will be, and do your best to put aside enough each month to have it covered by year end.

2. Do your 2018 tax return and agree your liability as early as possible in 2019 (that doesn't mean you have to hand over the cash then though), and use that calculation to decide on what basis you will pay your 2019 preliminary tax and how much it is likely to be. As you only started as a sole trader in May, the 100% of prior year option may not apply to you, and you might have to go with 90% of your 2019 liability (which you'll have to cough up by the pay and file date in November 2019 so you have almost the whole year to put the money aside).

3. Remember the deadline of 31st Oct 2019 to make pension contributions which can be offset against your 2018 tax liability.

4. Engage a tax specialist to help with all of the above and to make sure that you're claiming every single allowance and relief possible - you'll probably find that their fees will not only be deductible, but will be more than covered by additional tax savings.

I'm not a tax expert, just someone in a similar situation.

Good luck with it!

brdst3r

Just to confirm, if a self employed individual expects less than 5000 euro income/year should he/she still submit the "preliminary tax assessment" for the current year through form 11 on ROS?

Remember the deadline of 31st Oct 2019 to make pension contributions which can be offset against your 2018 tax liability.

Is this done automatically by submitting form 11 or are there additional steps?

adrianw

Banjaxed82 wrote: »

I'm sure this is well worn ground, but just looking to get 2 questions answered, as I'm reading too much confusing/conflicting info.

I was a PAYE worker for 6 years until May of this year. I have been self employed (sole trader) since then.

The questions:

1.) Am I right in saying I do not file my first tax return until October 2019?

2.) When it comes to paying my 'preliminary tax', as I was not self employed last year, can I put "zero" down for this?

Any clarification would be much appreciated! Thanks

At the risk of providing conflicting information just to confirm.

If 2018 is your first year as a sole trader from an administration point of view your first form 11 is due in November 2020 (assuming Revenue give their annual extension from October).

Balance of tax for 2018 will be due in November 2019 and preliminary tax for 2019 will be due in November 2019.