Don't make forms taxing
Published 05/10/2010 | 05:00
Children often get a scare at Halloween, but it is nothing compared to the fear that the self-employed can experience when getting their income tax returns completed by October 31.
But it doesn't have to be a traumatic experience if you are well prepared.
Most taxpayers in the self-assessment system have received a 'pay and file' reminder recently. The first thing you need to do is send a tax return to the Revenue. This lays out what you have earned -- or lost, as the case may be -- in 2009. This document is a legal requirement, so don't mess with it.
Often people will send in a cheque or payment based on what their accountant has calculated with the tax return. Whatever way you do it, you'll need to have all your taxes for 2009 completely paid up by the end of this month.
But you are not home and dry just yet. The Revenue will also want you to pay most of your tax liability for 2010 in what they call a 'preliminary tax'. It must amount to at least 90pc of the 2010 final liability or 100pc of the liability for 2009.
Those who are computer savvy have until November 16 if you pay and file online using the Revenue online service (ROS).
It is important to pay the correct amount of preliminary tax and to pay it on time, otherwise you will be exposed to penalties that quickly mount up. The first is interest of 0.0219pc per day. That may not seem like much but it adds up to 8pc per annum and it's not up for debate. The second is a surcharge if you miss the October deadline. This amounts to 5pc until December 31, 2010, or 10pc if you dally until after that date. The surcharge will also be included in the daily interest rate charge, so potentially you could be looking at an all-in penalty of nearly 20pc a year for late payments or returns. That's severe enough to make borrowing on your credit card look like value!