As a self-employed person in Ireland, you are responsible for assessing your own taxes. That doesn’t just mean keeping meticulous bookkeeping records and preparing sole trader accounts, but also meeting various tax filing deadlines throughout the year. With a number of different taxes that you are liable for, all with their own set of guidelines and rules, it can be tricky to wrap your head around. But to avoid any penalty charges or any nasty surprises later on, it’s important that you are clear on not only what taxes you need to pay, but when you need to pay them. Read on to find an in-depth look at the tax filing deadlines for self-employed people in Ireland.
Pay & File Deadlines
The Pay & File deadline date for 2021 income tax returns filed through Revenue’s Online Service (ROS) is mid-November, with Revenue yet to publish the official date. There is no change to the deadline of October 31, 2022 for taxpayers who file on paper rather than online.
How Often Do I Need To Pay My Taxes?
In Ireland, the tax year runs from January 1 to December 31. Throughout that period, different kinds of taxes will need to be paid at different intervals and on different dates. Here is a breakdown of the different taxes that most self-employed people in Ireland pay. If you are considering the change from sole trader to a limited company to save tax read this.
The self-assessment tax return must be filed once every year, based on the income you earned during the previous tax year, e.g. the tax return you file in 2022 will be for all your income earned in 2021. At that time, you will make a preliminary tax payment, which is essentially an estimate of how much tax is due for your current trading year.
If you have any taxes outstanding for the previous tax year (in other words, if your previous preliminary payment was not enough) then this payment is due at the same time. If you run a limited company see how to pay yourself from a limited company.
Income Tax Deadline
Income tax is usually due on or before October 31 of each year, or slightly later in mid-November if you are using the Revenue Online Service (ROS). This deadline is for both filing and paying your taxes.
If your turnover is €75,000 for the supply of goods or €37,500 for the supply of service, you must become a VAT-registered sole trader. You can do this online through the ROS, completing a TR1 form if you are an individual, sole trader trust or partnership, or a TR2 form if you are a limited company.
You will usually make VAT returns and payments every 2 months, which you can do through the ROS. Once you are registered for VAT, you will be sent a VAT 3 form which will tell you the exact date the payment is due. However, depending on your circumstances, arrangements can be made to pay your VAT either more or less frequently. These taxable periods are as follows:
- Every month if you are able to
- Every 4 months if your annual VAT liability is between €3,001 and €14,400
- Every 6 months if your annual VAT liability is €3,000 or less
Universal Social Charge (USC)
If you make more than €13,000 a year, you are liable to pay USC on your income. The rate that you will pay varies depending on how much you earn. You will receive reduced rates if you earn less than €60,000. If you earn over €100,000, an extra 3% surcharge will be added on top of the standard rates.
Universal Social Charge (USC) Deadline
Your USC payment is due once a year, at the same time you complete your annual Form 11 tax return and make your preliminary tax payment. Any balance will be collected when the final assessment issues.
Pay Related Social Insurance (PRSI)
PRSI contributions are deducted from your income to fund social insurance payments like Jobseeker’s Benefit and state pensions. There are different rates depending on what category you are in. Self-employed people fall under Class S PSRI. You must pay 4% of all your income or €500, whichever is greater.
Pay Related Social Insurance (PRSI) Deadline
Your Class S social insurance payment is due every year, at the same time as your income tax return, and is always paid for the full tax year.
If you hire staff to work for your business then you will need to operate a payroll system and deduct taxes from your employee’s wages. You don’t have to worry about a payroll system because outsource payroll service is an easy way how to manage it. These deductions will cover all the taxes above except for VAT, which employees are not liable for. However, it is the employee’s responsibility to claim for tax reliefs or credits or that might reduce the amount you need to deduct.
Employer’s PAYE Deadline
You are required to file payroll submissions every time you pay your employees, whether that’s every week, every fortnight or every month. Revenue will generate a statement by the 5th of the following month. The statement will show your total liability for that month based on your payroll submissions. You must pay this within:
- 14 days after the end of each month
- 23 days after the end of the month if you file and pay using the ROS
If you accept the statement by the 14th of the following month and it then becomes a monthly statutory return.
What Happens If I Miss The Tax Deadlines?
If you miss a tax deadline, it is likely that you will incur a penalty. However, this penalty will depend on what kind of tax it is as well as the circumstances for your late payment.
If you miss the deadline to file your income tax, you will have a charge added onto your total amount due. How much that charge will be depends on how late you are. The charges are as follows:
- If you file your tax return before the end of the year, there is a penalty of 5% of the tax due
- If you file your tax return after the end of the year, there is a penalty of 10% of the tax due with a maximum charge of €63,485
You will also be liable to a daily interest rate penalty.
If you don’t pay your VAT on time, interest is charged on a daily basis from the date the payment is due until the amount outstanding is paid. The rate of interest is 0.0274% per day or part of a day.
If you pay your tax after the due date, Revenue will charge you interest from the 14th of the month. The rate of interest is 0.0274% for every day the payment is late.
While being self-employed certainly has its benefits, there is plenty to remember when it comes to filing your taxes on time. To take the stress out of the process, it’s important that you find an accountant to help you navigate the tax system and avoid any unwanted penalties. At the SCK Group team, we have talented professionals who help self-employed people all over Ireland take control of their finances. To find out more about how we can help, head over to our contact page and someone will get back to you as soon as possible.