In short
If you file a Form 11, each 31 October you pay last year's balance and an estimate of this year's tax. That estimate is preliminary tax. Pay enough under one of three tests and there's no interest, even if the final figure turns out higher.
The three tests
| Pay at least | Based on | Good when |
|---|---|---|
| 90% | This year's final tax | Your income is falling |
| 100% | Last year's final tax | Your income is rising or steady |
| 105% | The year before last, paid by monthly direct debit | You prefer spreading payments |
Worked example
Last year's tax was €8,000. You expect this year to be higher. Paying 100% of last year, €8,000, by 31 October meets the test. The extra is simply paid with next year's balance, without interest.
Your first year
New self-employed people often don't owe preliminary tax for their first year, because there's no earlier year to base it on. The second October can then be a large bill: year one's tax plus year two's preliminary tax. Plan for it.
Sources
Revenue: Preliminary tax, on revenue.ie. Add the exact page link before publishing ◆.
General information, not advice on your own situation. TaxMind checks your record before filing anything.
