Galway Accountants GBS & Co Review Preliminary Tax Requirements
1. Requirement to pay Preliminary Tax
A chargeable person is, by virtue of the current Pay & File rules in Part 41 of the Taxes Consolidation Act (TCA) 1997, required to pay Preliminary Tax directly to the Collector General each year. The amount of Preliminary Tax required to be so paid is calculated by reference to the amount of tax which is likely to become payable  by the person for the tax year, or accounting period in the case of a company.
2. Minimum amount required to avoid interest charges
In order to avoid interest charges in relation to Income Tax or Corporation Tax, a certain minimum amount of Preliminary Tax must be paid for the tax year or accounting period involved. In the case of an individual liable to Income Tax, to avoid interest charges, the amount of Preliminary Tax to be paid for a tax year must be equal to or exceed the lower of:
- 90% of the tax payable by the individual for the tax year,
- 100% of the tax payable by the individual for the previous tax year, or
- 105% of the tax payable by the individual for the pre-preceding tax year. [This final option is only available where Preliminary Tax is paid to the Collector General by direct debit and does not apply where the tax payable for the pre-preceding year was nil].
Any queries in relation to this or any other tax matter please contact Ciaran Guilfoyle of Galway Accountants GBS & Co at www.easypayroll.ie / email@example.com