Self-assessed taxpayers should be aware not only of the impending pay and file deadline but of the likelihood of a bigger bill this year courtesy of the USC (Universal Social Charge) and increased income levy.

The Sunday Business Post reports hundreds of thousands of people must file their tax return for 2010, pay the balance of last year’s tax bill and pay preliminary tax for this year by October 31. The increasing numbers of people who now opt to make their return and pay their tax online through ROS (the Revenue Online Service) have a further two weeks’ grace but will still have to stump up by November 15.

The bills for 2010 and 2011 will likely be higher because of:

  • The increased income levy during 2010
  • Restrictions on tax reliefs
  • The introduction of the USC

“For 2010, those with income of €125,000 who are claiming reliefs of over €80,000 will have their relief claims restricted,” a spokeswoman for the Irish Tax Institute warned. “For those impacted by this restriction a significant unbudgeted tax bill may arise this year.”

Taxpayers have three options when it comes to settling their tax affairs:

  1. Pay 90% of this year’s total tax liability
  2. Pay 100% of the 2010 tax liability
  3. Pay 105% of the 2009 tax liability

The Institute says the application of the USC makes calculating last year’s tax bill and this year’s preliminary tax liability that bit more complicated.

“If you choose to base your preliminary tax on Option 1 or Option 2, you must factor in the new USC. The calculation of preliminary tax is complex, and needs to be considered well in advance of the deadline. Where tax is underpaid Revenue can seek to impose interest,” the spokeswoman advised.

In another change this year, Revenue now requires certain categories of taxpayer to use ROS. These include:

  • Those claiming property-based tax reliefs
  • Those subject to the ‘high earners restriction’
  • Anyone holding offshore funds or products

If you require any assistance in preparing & filing your tax returns for 2010 or in planning and assessing your potential liabilities for 2011 contact Anthony Casey at Noone Casey for independent taxation advice.

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