End of the Tax Year: Your Questions Answered

It's that time of year again! The end of the tax year is upon us and it's time to start thinking about how to file our taxes. For many the thought of dealing with your taxes can be daunting. It is always recommended to seek the help of a professional tax advisor to ensure that you are compliant with the trickier aspects of Irish tax law. 

The process can become very time-consuming especially as the year winds down and we head into the festive season. But don't worry, we're here to help! In this blog post, we'll answer some of the most commonly asked questions about filing your taxes in Ireland. But first, let's begin with a brief overview of how tax works in Ireland.

The Tax Year and Process

The tax calendar in Ireland typically runs from 1st January to 31st December. This means that any income you have earned between these dates will be subject to tax. Ireland operates a Pay As You Earn (PAYE) system for the collection of income tax. Taxes are deducted at source from your wages or salary. 

If you are self-employed, you are taxed under the pay and file system and you will need to file a Self-Assessment tax return. This is usually done online through the Revenue website. Either way, you must be careful to ensure that you fulfil all of your legal tax obligations or you could face hefty penalties.

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What is the Deadline for Filing my Taxes in Ireland?

The deadline for filing personal taxes in Ireland is no later than the 31st October of the following year. For example; for the 2022 tax year, the tax return in respect of income earned in the year to 31 December 2022, must be submitted no later than 31 October 2023. This means that you need to have all of your paperwork and information located, arranged and completely ready to go by this date. The sooner you start preparing to file the better. Collecting and retaining information by gathering receipts, medical records, letters etc is vital and should be kept as a strictly adhered-to practise throughout the financial year. If you were to apply for tax credits or reliefs any and all supporting documentation will be necessary. In 2020, as a response to the Covid-19 pandemic, the Irish Revenue Office announced that the Pay and File date for the 2019 financial year had been extended to 11 December 2020. The following year, Revenue extended the filing date for self-assessed taxpayers for the 2020 financial year from October 31st to 17 November 2021 for those who pay and file on the revenue online service “ROS”. The same applies for 2021 tax year end, those who pay and file online have until 16 November 2022.

Many companies have their year-end as the calendar year end to coincide with the revenue tax year. The process around filing tax for businesses can be even more arduous than for someone on the PAYE system. 

Preliminary tax is paid by people who self-assess their income tax. This usually applies to people who are self-employed (like business owners). Preliminary tax is a combination of the income Tax, PRSI and USC that you expect to pay for the tax year. For example, if your accounting year is January 1st to December 31^st, you will still have to pay Preliminary Tax for the full year by October 31^st. It is important that you don’t underpay your preliminary tax or you may be charged interest. If you're not sure where to start, the best thing to do is to contact a professional tax advisor or accountant. At FitzGerald Flynn we also use the services of top tax advisers Avoca Tax Services and accountants NEXUS for our client’s needs.  They will be able to help you gather everything you need and make sure that your taxes are filed correctly.

What Will I be Charged for Missing the Tax Deadline?

In Ireland, failing to correctly submit your tax returns before the applicable deadline date will result in you being forced to pay a surcharge (an additional charge on top of the amount you are to pay in tax). 

If you are a self-assessed taxpayer, Irish Revenue have a number of methods to encourage you to file and pay on time:

• A late filing surcharge of 5 percent of your liability if you file within two months of the deadline up to a maximum penalty of €12,695  
• A late filing surcharge of 10 percent of your tax liability if you file two months after the deadline up to a maximum penalty of €63,485
• The surcharge liability is calculated without credit for preliminary tax paid on account
• Credit is allowed for PAYE tax deducted at source unless the chargeable person or their spouse/civil partner is a company director
• Underpayment of tax may be subject to interest at a daily rate of 0.0219 per cent and this may be backdated to the previous 31 October
• The surcharge forms part of the individual’s tax liability for the year, thus increasing their preliminary income tax requirement and potentially leading to interest charges
• Publication by the Revenue Commissioners in respect of certain tax offences and settlements
• A surcharge of 10 percent of the income tax or capital gains tax liability where the local property tax return was not filed or payments are not being met. 

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What Types of Taxes do I Need to be Aware Of?

In addition to income tax, there are a number of other taxes that you may need to pay in Ireland. These include stamp duty, inheritance tax, and value-added tax (VAT). Stamp duty is a tax that is payable on certain types of transactions, such as the purchase of property. Inheritance tax is a tax that is levied on the value of an inheritance. Value-added tax (VAT) is a consumption tax that is charged on the sale of goods and services. 

Each of these types of tax come with their own rules and regulations, as well as different processes for accurate filing. For example; the deadline for filing and paying your VAT is the 19th day of the month carried out on a bi-monthly basis. Revenue can change the frequency of this return depending on the size of your company. 

Capital Gains Tax (CGT) is another tax you may be liable for. This is a tax levied on the profit you make when you sell an asset, such as property or shares. The rate of Capital Gains Tax depends on the type of asset and your personal circumstances but the standard rate is 33% of the chargeable gains you make. 

The first €1,270 (annual limit) of a gain is exempt from Capital Gains Tax for each individual. Additionally, with CGT you have a specific set period of time wherein you must pay the tax. CTG will be looked at in more detail in a future blog with the assistance of our tax advisers Avoca Tax Services. As you can see things quickly become untenable when one takes on the entire burden of tax compliance without the aid of a professional tax adviser.

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I'm Retired and Don't have an Income. Do I Still Need to File a Tax Return?

Yes, even if you don't have an income, you may still need to file a tax return.  People aged 65 and over who only have income from certain sources may not need to file a return. These sources include the State Pension, Widow's/Widower's Pension, Occupational Pension, and certain annuities. As with many issues surrounding taxation your set of personal circumstances are vital in calculating what is owed. 

There are also exemption limits in place for older people. These are income limits below which no tax is payable and depend on your status whether it be married, single or widowed etc. Those aged 65 or over are also eligible for an Age Tax Credit. This is a non-refundable tax credit which reduces the amount of income tax you owe.

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Am I Paying Too Little? Or Too Much?

If you have any concerns that you are paying too little or too much tax, you can contact Revenue to check. Since the introduction of PAYE modernisation in January 2019  it has helped to eliminate forms like the P60, P35 and P30. These forms have been replaced by a monthly statement issued by the Revenue. If you think you have paid too much tax, you can claim a refund from Revenue. The process for claiming a refund will depend on how you paid the tax. These days, most of your form submissions with the Revenue Office can be done online by creating an account via their website. 

Conclusion

In conclusion, the end of the tax year can be a confusing and stressful time for many people. However, by understanding the process and being prepared, it doesn't have to be. If you have any questions or concerns, the best thing to do is to speak to a professional tax advisor. They will be able to help you navigate the process and make sure that your taxes are filed correctly and you can close out the year with peace of mind.

FitzGerald Flynn Insurance offers a wide range of financial planning services and our advisors would be happy to help you map out your plans for the end of the tax year.  At FitzGerald Flynn we also use the services of top tax advisers Avoca Tax Services and accountants NEXUS for our client’s needs. Contact us today to learn more!

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