The amount of preliminary tax that an individual is required to pay to avoid a charge to interest is the lower of:
- 90% of the final liability to tax for the current tax year, or
- 100% of the liability to tax for the immediately previous year, or
- 105% of the final liability to tax for the year preceding the immediately previous year where payment is made by direct debit.
Section 531AS(5) TCA 1997 (introduced by S 3 FA 2011) introduced changes to the 100% rule in calculating preliminary tax for 2011. Where an individual wishes to pay preliminary tax on the basis of 100% of the previous year’s liability, his or her preliminary tax payment for 2011 is to be based on the final liability for the year 2010 as if the USC had been payable and as if the income and health levies had not been payable for that year.
A systems development to the 2010 Notice of Assessment and the ROS 2010 Form 11, scheduled for completion in early July 2011, will show (in addition to the final Income Tax liability for 2010) the 2010 liability as adjusted for 2011 preliminary tax purposes. This will assist agents/customers in paying their preliminary tax liability for 2011. Revenue will issue a further eBrief when this development is completed.
The 90% rule remains unchanged. An individual calculating his or her preliminary tax for 2011 on the basis of 90% of the 2011 liability should incorporate the USC that will be payable for that year.
The 105% rule likewise remains unchanged. Where a direct debit is in place, the amount paid must equal 105% of the final liability for 2009.