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Self employed in Ireland: A guide to your taxes (Part 1 of 2)

I know, I know - it isn't the most exciting of aspects when it comes to running a business, but unfortunately it has to be done.

person holding pencil over a piece of paper with the word tax written on it

As there’s a lot ot get into, this topic will be split into two parts. In this post we'll go over the criteria for filing a self assessment tax return (or in the few cases that you don’t need to), and the method for self-assessment.

If you already know how self assessment works, but want to find out a bit more about how it all comes together, then in Part 2 we’ll have a closer look at a breakdown of each tax component: Income, Universal Social Charge (USC), Pay Related Social Insurance (PRSI), Value Added Tax (VAT), and about Tax Credits.

Right then, lets get stuck in...

image of report with calculator and pen lying on top

How do I pay my taxes working as self-employed in Ireland?

Being self employed, your method for paying tax falls under the self-assessment system, which you complete once a year. Before you can use the system, you must register with Revenue as self-employed- for which you'll need your Personal Public Service Number (PPSN).

If you're already a citizen of Ireland, or you've moved to Ireland to live there, then you'll have this already. Your PPSN is your unique number that is used for all dealings with government departments. If you're new to Ireland, then you can apply for a PPSN via Revenue.

If you want to use a company name that is different to your own name, then you'll also have to register with the Companies Registration Office (CRO), so that the information is linked.

Although Form 11 for self assessment looks complicated, in essence it's rather straightforward. Regardless of any income you make (outside of a normal non self-employed job that would fall under the PAYE system), you'll still have to register for self-assessment.

Under what circumstances do I pay tax if I'm self-employed?

You will need to do a self-assessment if you're paying tax for yourself or someone else if:

  • You have other income sources along with your PAYE salary
  • Are self-employed
  • You happen to be a director of an Irish company

You won't need to do a self-assessment if:

  • You only have an income of a PAYE salary
  • You have PAYE and non-PAYE income, but the non-PAYE income is below €5,000 or
  • if the non-PAYE income is noted in your tax credits (doesn't apply to company directors) or
  • your non-PAYE income is taxed at the source (so you are not double taxed)
  • Revenue have told you that you do not need to file a self-assessment.

Preliminary Tax

Image of calculator on piece of paper

Preliminary tax is the practice of paying what you think you need to cover your income bracket- and how your taxes are filed when you’re self employed (which you can submit via Revenue Online Service). This includes your income tax, Universal Social Charge, and Pay Related Social Insurance (which we will cover below). There are a few choices to choose from when paying preliminary tax. You can either:

  • Pay 90% of the tax due for the current year
  • The full amount (100%) of tax due for the previous year
  • 105% of tax due for the previous year. This however, only applies when paying by direct debit, and is not necessary if you have no taxes that need to be paid for the year before the prior calendar year.

Preliminary tax must be paid by the 31st of October of the current tax year.

Taking a hypothetical example for a tax year of the 1st of January to the 31st of December 2019: You file your Preliminary tax for the year by the 31st of October 2019. Once you’ve done this, you would then file a tax return for any outstanding tax for the previous year (2018). This return for the previous year must also be submitted by the 31st of October, or there is €250 fine.

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