Keeping up to date with your books and readying your accounts for filing can be a daunting task. The organisation of your business finances is central to the success of your business. As your business grows, and its books and accounts become more complex, you can rely on our bookkeeping experts to be keeping your books up to date so that you can focus on your business.
Paying tax as a sole trader or filing a self-assessment tax form to report other earnings, Outbooks assists clients with all Irish tax-collection systems including self-assessment. We make sure our clients are 100% compliant across all tax-collection systems of the state while legally reducing tax liability as much as possible. The various types of tax that typically our clients will need to pay include:
- Capital gains tax
- Corporation tax
- Tax on dividends
- Income tax, pay-related social insurance (PRSI), universal social charge (USI)
- Tax due on investment interest
- Tax on pensions
- Tax on property interests
- Tax on rental income
- Tax on shares
- Value added tax (VAT)
Paid via PAYE and with other income?
You do not need to register for self-assessment if you only have PAYE income. But please note that if you have earned income outside PAYE, even if it has not exceeded €5,000 and your gross non-PAYE income does not exceed €30,000, for PAYE purposes, this income must be coded. In this case, you must submit a Form 12 online through PAYE Services in myAccount so that the income is accounted for in calculating your tax credits and standard rate cut-off point for PAYE purposes. You can deduct allowable expenses here too if this applies.
Tax planning is just one of the many services Outbooks offers. Tax planning helps you to run your business’s finances more efficiently in relation to personal income and assets and in respect of how both may impact on how much tax you might be liable to pay. We ensure you are as tax-efficient as possible both as a business and personally while ensuring 100% compliance with the Irish tax system.
Outbooks will take care of all your tricky tax-related paperwork, including your self-assessment tax return. We will ensure total compliance with Irish state tax law and make sure that you benefit from any tax reliefs you may be entitled to claim.
Self-Assessment Tax Returns
In Ireland, you must file what is called a ‘self-assessed tax return’ to report any income not taxed at source via pay as you earn (PAYE). All income that is not taxed at source must be reported to the Irish Revenue by filing a tax return under the Pay and File system. This includes the self-employed, sole traders, and contractors, directors of Irish companies, and anyone else who has earned other taxable income that has not been taxed at source.
Outbooks’ team of bookkeepers and accountants will provide the expertise and know-how to assist you throughout the process of filing your self-assessment tax returns in Ireland for income tax purposes. Outlined below are some of the main features of self-assessment. We hope this will help you either navigate the system yourself or seek the expert advice of Outbooks.
Who should register for self-assessment?
Registration for income tax self-assessment is mandatory for:
- Self-employed taxpayers
- Directors of companies operating in Ireland
- Taxpayers whose main source of income is, or
- who earn income from other sources where tax has not been collected through PAYE, including:
How do you register for self-assessment?
For more information about registering your business with Revenue, see registering for tax as a sole trader. Once registered, your Personal Public Service Number (PPSN) should be used for all correspondence with tRevenue in relation to your business.
Once registered, returns and payments are made using Revenue Online Service (ROS).
Your business trading name
You may wish to trade under a different name to your family name or surname. In this case, you must register your business name with the Companies Registration Office (CRO) by completing form RBN1 and filing it. You must do this within one month of adoption of your business name.
When is the filing deadline for self-assessment?
You must complete the annual self-assessment tax return to calculate any income tax due and then file it before or by the ‘common date’: this is 31 October each year. The return you file each year will relate to the previous financial year to which the tax relates, so the tax return you filed on 31 October 2022 will have reported income earned in 2021.
What is the deadline for paying whatever you owe?
The amount of tax you owe must also be paid online under a system known as Pay and File. Taxpayers are given 30 days grace from the date of filing to pay what they owe for the previous tax year and may also need to pay a sum known as ‘preliminary tax’ against the following year’s tax bill if applicable.
What is preliminary tax?
Preliminary tax is an estimate of what you are likely to owe in income tax, pay related social insurance (PRSI), and the universal social charge (USC) in the following tax year. It must be paid by 31 October of the current tax year.
Preliminary tax can be paid using VISA or MasterCard credit or debit card.
How is preliminary tax calculated?
The calculation for preliminary tax is either:
- 90% of the tax due for that year
- 100% of the tax due for the preceding year
- 105% of the tax due for the pre-preceding year (if paid by direct debit; it is not applicable if no tax was due for the pre-preceding year)
Your last three years’ tax bills are:
- €2,000 in year one
- €3,000 in year two
- €4,000 in year three
It is time to file your tax return for year two (due on 31 October in year three), so you need to decide how much preliminary tax to pay in respect of year three. You could decide to pay:
- €3,600 (90% of the tax due for that year, year three)
- €3,000 (100% of the tax due year two)
- €2,100 (105% of the pre-preceding tax year, year one)
Then, when it is time to file your tax return for year three (by 31 October of year four), having calculated your tax bill for the year, the preliminary tax you paid in year three is less than the amount of your tax bill. This means you will have to pay the balance. But had it been more than the preliminary tax you paid, you would have been entitled to a refund.
What are the income tax rates in Ireland?
The tax you will pay depends on:
- Your residence status, which is dependent on the number of days you are present in Ireland during the tax year (1 January to 31 December)
- Your personal circumstances
- Where your income comes from
Where you carry out the duties of your trade, profession or employment
Standard rate and higher rate tax in Ireland (2022)
|Single or widowed/surviving civil partner without qualifying children||€36,800 at 20% standard rate, balance at 40% higher rate||€35,300 at 20% standard rate, balance at 40% higher rate|
|Single, widowed/surviving civil partner with qualifying child (single person child carer credit)||€40,800 at 20%, balance at 40%||€39,300 at 20%, balance at 40%|
|Married or civil partnership with one partner earning income||€45,800 at 20%, balance at 40%||€44,300 at 20%, balance at 40%|
|Married or civil partnership with both partners earning income||€45,800 at 20% (with increase at maximum €27,800); balance at 40%||€44,300 at 20% (with increase at maximum €26,300); balance at 40%|
Pay-related social insurance (PRSI)
Self-employed taxpayers will usually be liable to pay Class S PRSI contributions either at a rate of 4% on all income or at €500, whichever is the greater.
You are exempt from Class S PRSI if you earn less than €5,000 from self-employment over a single tax year, but you have the option to pay a €500 voluntary contribution to keep your social welfare payments up to date.
If employed by a limited company with ‘close ownership’, that is, one owned by your spouse or a family member, you will pay PRSI Class A (or Class J). If you participate in the running of the company, have control over its operations, hold a directorship or a shareholding position, you may be liable to pay Class S PRSI (unless exempt earning less than €5,000).
If two or more family members are operating a business as a partnership and sharing the profits they are insurable as self-employed contributors at Class S if they earn over €5,000. Family members employed by a partnership pay Class A (or Class J).
You can see examples and find out more about PRSI credit on the Department’s website.
Universal social charge (USC)
Universal social charge (USC) is the tax paid on gross income for anyone earning over €13,000. If you are self-employed, you pay what you owe in USC alongside your preliminary tax payment. USC is paid to Revenue and forms part of your self-assessment tax return.
The standard USC rates for 2021/2022 are
|Note that there is a 3% USC surcharge if your non-PAYE income is more than €100,000 a year.|
What are circumstances for reduced rates of USC?
Reduced rates of USC depend on age and personal circumstances. Exemptions or reduced rates may apply if you are aged 70 and over; and/or you hold a full Medical Card; note that the taxpayer is responsible for informing Revenue if they hold a full medical card.
Reduced rates will apply for the whole year if you are aged 70 or over; and/or your total income is €60,000 or less. If your income is over €60,000 then the standard rates of USC apply to your full income.
Earned income tax credits
Tax credits can reduce your overall tax liability. Self-employed taxpayers can claim an earned income tax credit of €1,650 (in 2021/2022).
The credit you will get is the lower of either €1,650 or 20% of your qualifying earned income. Both trading income (under Schedule D) and pay earned by proprietary directors qualifies for earned income tax credits.
Note that you cannot claim tax credits against rental income or deposit interest income.
Flat-rate expense allowances
Flat-rate expenses cover the cost of equipment an employee needs for work. This equipment may include tools and uniforms and stationery, etc.
These costs must be incurred wholly and exclusively to perform the duties of employee’s work, and the costs must be directly related to the nature of the business or their employment. The flat-rate expenses list covers a wide range of professions and is a good guide to what is and is not an allowable expense.
The deductions are agreed between Revenue and representatives of groups or classes of employees (usually trade union officials). All employees of the class or group in question can then claim the agreed deduction in their own tax credits.
Flat rate expenses can be claimed by completing a self-assessment or income tax return.
If paid via PAYE, you can find the form in Services in myAccount.
Allowable business expenses can reduce the overall tax bill for self-employed taxpayers, but the expense must be business related. To be allowable as a business expense it must be:
- Incurred ‘wholly and exclusively’ for the purpose of the trade.
- It must be a ‘revenue expense’ and not a ‘capital expense’. Note the difference: a capital expense is normally a one-off purchase of an asset (e.g. a vehicle, furniture, computer), while a revenue expense typically relates to expenditure incurred on an ongoing basis (e.g. electricity or stationery).
- Must not be an expense specifically disallowed in tax legislation.
Items that can typically be put down as allowable expenses, so long as they directly relate to running your business, include:
- Purchase of goods for resale
- Employees’ pay
- Rent and bills for your business premises / or home office (proportioned between private and business)
- Running costs for vehicles or machines used in your business
- Lease payments for vehicles or machines used in your business
- Legal fees, bookkeeping and accountancy fees, insurances
- Interest payments for money borrowed to finance your business
For expenses that relate to both business and private use you must proportion the cost that relates to business activity and only put this portion down as an expense. Things such as phone, rent, motoring expenses fall into this category.
For more about expenses see the list on Revenue website https://www.revenue.ie/en/starting-a-business/claiming-a-deduction-for-expenses/index.aspx
Remote bookkeeping services keep clients' books in perfect order, updated as per agreed/desired turnaround time, and do not interrupt routine operations.
We help keep you compliant, manage your regulatory risk and provide transparency (both in-country and across borders), allowing you to focus on your ambitions.