How to calculate preliminary tax if most income is PAYE?

HQvhs · 04-03-2019 05:04PM #1

Hello,

I am a PAYE income worker, however have a source of non-PAYE income (approx €3500 which qualifies for the artists' tax exemption, and €1500 which does now qualify). I estimated that my net tax on this extra income is approx €750.

I am required to fill out Form 11 each year, and usually am owed a net refund (I have an pension/AVC and third-level fees which I have claimed back for 2018). For instance, when completing my tax liability for 2018 on ROS, it estimates am owed a refund of approx €600.

However, I am unsure how to calculate my preliminary tax for 2019. Do I have to include my PAYE tax for this year (which, if so would be onerous!), or just the tax I would owe on my non-PAYE income (which is mostly exempt anyway)? If so, do I put down the 100% of the tax liability on my non-PAYE income for 2018 (i.e. €750), or on my entire income (PAYE + non-PAYE), or do I put down the refund from 2018 (i.e. -€600)?

I can't seem to find a good guide for calculating preliminary tax for people who have a largely PAYE income anywhere, unfortunately, so would appreciate any pointers here.

Thanks.

Calahonda52 · 04-03-2019 07:07PM

IIRC if you are on mostly PAYE then no need for Prelim

wiggle16 · 05-03-2019 02:18AM

The above answer is correct. Preliminary tax is based upon your expected liability to tax - if you're not going to have a net liability after filing the return, there's no requirement to pay preliminary tax.
Below is text from one of my posts in response to a similar question a few months ago, it might shed some more light on it for you. Note it was posted in 2018, so you'd adjust the years accordingly. In your case, situations (B) and (C) would likely apply to you:

There are three options you have when paying preliminary tax. The requirement to pay preliminary tax depends on what liability you have for the year you are filing for and whether you anticipate having a liability in the following year.

When you file your return you will end up with one of 3 situations:
a) a liability
b) a refund
c) a nil tax balance, where you neither owe nor are owed money.

You have three options for paying preliminary tax for 2018:
1) 105% of your liability for the year before last (2016, so not an option in your case)
2) 100% of your liability for the previous year (2017)
3) 90% of your estimated liability for the current year (2018)

a) If you filed tonight and had a liability of €100, you can either pay €100 preliminary tax under option (2), or you can pay 90% of what you think you will owe for 2018 (for example, if you've had a good year or a bad year and you think you will have a much bigger or much smaller liability for 2018, you can pay 90% of what you think you'll owe). Either of these satisfies your preliminary tax obligations for (a).

b) If you get a refund, for preliminary tax purposes this means you had a liability of zero. You can pick option (2) and pay no preliminary tax (since 100% of 0 is 0). Or if you think you'll owe money for 2018 you can pick option (3) and pay 90% of it.

c) If you balance, then you've zero liability and it's the same as (b) above.

Sorry for the long post but preliminary tax is notoriously confusing if you're not familiar with it. Basically, if you have a liability, then you have to pay something in order to be compliant with preliminary tax obligations.

There's no surcharge, exactly, for not paying preliminary tax on time. However, if you had a liability of €1000 when filing return for 2017, and paid zero preliminary tax for 2018, then if you have a liability next year when you file for 2018 there may be penalties applied, and the liability is due immediately (ie, you don't have until 31/10/2019 to pay it, Revenue want it there and then, because you didn't satisfy your obligations).

Hope that's kinda clear

Grumpypants · 05-03-2019 08:34AM

I'm similar and Revenue told me if it is below 5k you just declare additional PAYE income online. You can do it online on PAYE Anytime. I set mine to take a bit every month from my tax credits. It lowers my pay a little each month but I'm not hit with a bill at the end of the year. It's more like a direct debit. Once i get my p60 i fill out form 12 and get a balancing statement to make sure it's set.

How to calculate preliminary tax if most income is PAYE?

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