Preliminary tax is your estimate of the Income Tax, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) or Corporation tax that you expect to pay for a tax year.
You must pay this by 31 October of the tax year in question if you are an individual or if you’re a company about 39 days before your year end. For example a company with a 31 December year end should pay their preliminary tax on 23 November.
You must make sure that you do not underpay your preliminary tax, or you may be charged interest. The amount of preliminary tax for a year must be equal to, or more than, the lowest amount of the following:
- 90% of the tax due for that tax year, or
- 100% of the tax due for the immediately previous tax year, or
- 105% of the tax due for the tax year preceding the immediately previous tax year (often called the ‘pre-preceding year’). This option only applies where you pay by direct debit. It does not apply if the tax due for the pre-preceding year was nil.
A small company is a company whose corporation tax payable is not above €200,000 in the previous accounting period (excluding surcharges and Section 239 income tax).
Small companies can base their preliminary tax for an accounting period on:
- 100% of their CT liability for the previous accounting period, or
- 90% of their CT liability for the current period (and there is provision for a top up payment to be made).
New or start-up companies
New or start-up companies do not have to pay preliminary tax for their first accounting period if they have CT that is less than €200,000 (excluding surcharge but including Income Tax payable under Section 239 TCA 1997). Instead, they must pay their final CT charge for the first accounting period when submitting their CT return.
Further information on corporation tax filing can be found in the following revenue leaflet
Please feel free to contact me if you or your company need any help in paying tax