Preliminary tax.

[k06351000]

I don’t believe I am liable for preliminary tax but the information am getting from my accountant is a bit confusing so thought I would confirm here.

In 2024 the majority of my income was through the Paye system, I also had a small amount of non pay income. I also maxed out payments to a PRSA which meant I was due a tax refund at the end of the year.

In 2025 the majority of my income was again through Paye, again I had a small amount of non Paye income but also received a five figure dividend from a company that I have a minority shareholding in. I have maxed out my contribution to my PRSA however doing the calculations I will still owe about €2,000.

My accountant is suggesting I should have paid preliminary tax for 2025. My understanding is that I don’t have to as my 2024 liability was a minus figure . “

 

[jpd]

Your understanding is correct

 

[ClubMan]

Is 2025

I also maxed out payments to a PRSA which meant I was due a tax refund at the end of the year.

my 2024 liability was a minus figure .

I don't understand this? A tax refund doesn't mean that you didn't have any tax liability. And I don't know what you mean by "my liability was a minus figure"? Surely the minimum tax liability is zero rather than a negative sum? Indicative figures for your situation might clarify matters.

What is preliminary tax?

This page utlines what preliminary tax is.

www.revenue.ie

The amount of preliminary tax for a year must be equal to, or more than, the lowest amount of the following:

• 90% of the tax due for that tax year
• 100% of the tax due for the immediately previous tax year
• or
• 105% of the tax due for the tax year preceding the immediately previous tax year (often called the ‘pre-preceding year’). This option only applies where you pay by direct debit. It does not apply if the tax due for the pre-preceding year was nil.

 

[jpd]

When you have PAYE income and non-PAYE income your preliminary tax is based on your non-Paye income

 

[jpd]

Otherwise, you would have to pay a huge preliminary tax

 

[k06351000]

I don't understand this? A tax refund doesn't mean that you didn't have any tax liability. And I don't know what you mean by "my liability was a minus figure"? Surely the minimum tax liability is zero rather than a negative sum? Indicative figures for your situation might clarify matters.

Sorry I am probably mixing up terms

In 2024 I earned 50,000 through PAYE
Earned 200 Non Paye income
Made 7000 payment to PRSA

2025 earned 55,000 through PaYE
Will earn 500 Non Paye Inxome
Got a 20,000 dividend with 5,000 withheld.
Will make 8,000 payment to avc.

Revenue states preliminary tax can be based on the lower

• 90% of the tax due for that tax year
• 100% of the tax due for the immediately previous tax year

This confuses me as if it’s the total tax I paid through PaYE it’s obviously a very large number 2024.

 

[Ciru75]

The "tax due" for preliminary tax calculations is the tax due on your tax return after deducting tax paid through PAYE, dividend withholding tax, etc. but before deducting preliminary tax paid.