Preliminary tax payments as a sole trader

soletrader2019

Registered User
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Hi,
I'm starting up as a sole trader from start of August. I'm a bit confused as to how tax payments (PAYE, USC etc) work being self-employed. I've researched it online but I'm still confused as to the whole preliminary tax thing so I hope someone can just clarify things for me. I've registered with revenue and my business year will be the same as the tax year. My question is when will my first tax payment be due and in what form?
Do I make a return this October 2019 involving tax for the 2019 tax year and a preliminary estimated payment for tax year 2020? Or will my first return be October 2020 with payment for all tax due for 2019 and a preliminary payment for my 2020 tax bill? The second option is my understanding of it but not sure that I don't have to do anything this year.
Thanks in advance.
 
If your business starts in August 2019, your first return is due by October 2020.

Any preliminary tax is due in Nov 2019 but you can base it on a number of criteria -one of which is prior year tax. So as your prior year tax is 0, there is no preliminary tax due.
In Nov 2020 you will have to pay 2 years tax - tax on your profits in 2019 and preliminary tax for 2020. As you will only be trading for 5 months in 2019, presumably your income and tax will be low, so again you can base your 2020 preliminary tax on your 2019 tax.
 
Thanks JPD. Was just getting confused because people would refer to the payment for preliminary tax as a payment for next year but in reality its a payment for the tax year in which the return is made even though there's still a couple of months left in the year. Its clearer to me now though. Cheers
 
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