Do I need to pay preliminary tax?

In short, preliminary tax is an estimate of the tax you will owe on next year’s tax return.

In order to fulfil your preliminary tax obligations for 2024, a payment should be made along with the filing of your 2023 tax return, but no later than 14 November 2024, when paying and filing your 2023 income tax return online on ROS.

You have three options when deciding what level of preliminary tax that you are obliged to pay:

•  Based upon 100% of your 2023 tax charge.
•  Based upon 90% of your 2024 tax charge (this will need to be an estimate at the time of filing the return).
• 105% of your final tax charge for the pre-preceding tax year (2022). This option is only available where preliminary tax is paid by monthly direct debit.

If you fail to pay preliminary tax, or underpay the preliminary tax, Revenue may charge interest on this late payment. This interest is calculated at 0.0219% per day (circa 8% per annum).

In the past Revenue were slow to apply interest to underpaid preliminary tax, especially where the amounts involved were quite low. There has been a marked increase in recent times, however, of Revenue enforcing these powers and applying the interest charges.
 

 

Date published 22 Oct 2019 | Last updated 15 Oct 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.