Part of a taxpayers pay and file obligations each year involve making a payment on account (Preliminary Tax) against the current year Income Tax charge, in addition to settling the balance of tax due for the prior year.
There are three options to calculating Preliminary Tax 2011 due;
The first option for preliminary tax 2011 may be a viable choice in a scenario where the taxable income for the current year has fallen considerably since the previous year. It is important that you factor in any changes to tax rates applicable in 2012 however.
The second option provides the most certainty, as you will know for definite what the prior year tax charge is. It should be noted that an adjustment may also be necessary to this where the taxpayer availed of any property reliefs in the prior year, in the form of an additional 5% USC payment.
If the third option is chosen, you must set up a direct debit arrangement with ROS. In order to do this at least 3 months debits must be taken in the year so it would need to be set up in October at the latest.
It is vital you pay the right amount of preliminary tax as failure to do so may attract interest penalties of 0.0219% per day on any underpayment when your 2012 return is made.
Contact OSK for more information.
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