A Guide to Preliminary Tax in Ireland

  • By: Walter Dunphy ACCA
  • Date: May 23, 2022
  • Time to read: 5 min.

Whether you are operating as a sole trader or limited company in Ireland you will be faced with something called preliminary tax every year.

This can be a confusing subject for many first-time business owners, but not to worry we will go through all the basics with examples in the blog post to get you up to speed.

What is Preliminary Tax?

First of all, let’s start with a definition of what preliminary tax is.

Preliminary tax is an estimate of Income Taxes or Corporation Taxes that will be due for the current tax year. For example, the current year is 2022, at some point before the year is finished you will need to pay the Revenue Commissioner an estimated amount of how much tax will be due for the year.

This is normally where a bit of confusion sets in.

“But how do I have to pay tax for 2022 already, shur the year isn’t even over yet” – They are the rules, unfortunately.

The amounts due and dates will differ depending on whether you are operating as a sole trader or a limited company. We will cover both of these scenarios shortly.

It is important to understand what preliminary tax is and how much may be due as many small businesses often got caught out by not having enough cash set aside for preliminary tax. This can lead to businesses borrowing at costly rates just to avoid penalties and interest surcharges.

How Much Preliminary Tax Should I Pay in Ireland?

There are different rules for preliminary taxes depending on whether you are a sole trader or a small/large limited company.

Sole Trader:

Sole traders / self-assessed individuals must go with one of the following amounts when paying their preliminary tax for the current tax year:

  • 90% of tax due for the year
  • 100% of the tax due for the preceding year
  • 105% of the tax due for the pre-preceding year (if paying by direct debit)

Large Limited Companies (CT liability > €200k):

Large companies may pay preliminary tax in two installments, the first installment being either:

  • 50% of the corporation tax liability for the previous accounting period or;
  • 45% of the corporation tax liability for the current accounting period.

The second installment will bring the preliminary tax up to 90% of the final tax due for the current accounting period.

Small Limited Companies (CT liability < €200k)

Small companies must pay their preliminary tax bill in one installment being either:

  • 100% of their CT liability for the previous accounting period
  • 90% of their CT liability for the current period (and there is a provision for a top up payment to be made).

Methods of Payment

There are a number of ways that you can pay your preliminary tax to the Revenue Commissioner:

  • ROS Debit Instruction via Revenue Online Services
  • Single Debit Instruction vis myAccount
  • Direct Debit – via the My Services Portal on ROS

What are the Preliminary Tax Deadlines?

Sole Trader:

Preliminary tax must be paid by the 31st of October of the tax year in question.

Large Limited Companies (CT liability > €200k):

Installment 1: 23rd of the sixth month of the accounting period.

Installment 2: 23rd of the eleventh month of the accounting period.

Small Limited Companies (CT liability < €200k)

Preliminary tax must be paid 31 days before the end of their accounting period, and before the 23rd of that month.

Penalties for being late

The Revenue Commissioner have a flat daily rate of 0.0219% that accrues on any overdue tax payments. This rate equates to an annual interest rate charge of approximately 8%.


Michael is one of the longest-serving Butchers in Navan and has operated as a sole trader from his premises on the main street for many years.

Every year he works with a local accountant to prepare his accounts (31 December) in order to work out how much taxes are owed.

YearTax Paid/Due
2022€40,000 (Trending)

It is September 2022 and Michael is trending towards an estimated tax bill at the €40k.

But currently, Michael is working with his accountant to finalise his 2021 taxes and as part of that process, he must fulfil his preliminary tax obligations for 2022.

As Michael is a sole trader he must pay at least the minimum amount of the following three options:

  • 90% of the tax due for 2022 = €36,000 (€40k *90%)
  • 100% of the tax due for the preceding year 2021= €38,000
  • Or 105% of the tax due for 2020 (pre-preceding year) = €37,800 (36,000*105%)

This means that as a minimum Micheal will have to pay at least €36,000 preliminary tax for 2022.

Do you have to pay Preliminary Tax in the First Year of Business or Self-Employment?

If you have set up a new company in Ireland you will not have to worry about paying preliminary tax for your first accounting period.

Sole Traders:

You have a choice here as a sole trader, you can either pay 100% of your prior year’s tax liability which will be €Nil as you were not trading last year. Or you have the option of paying 90% of your current year’s tax bill. The upside of this is you will then pay less tax in the following year.

Limited Companies:

Only companies that have a CT bill of less than €200k are able to avoid paying preliminary tax in their first year of trading.

Do you Pay Preliminary Tax on Rental Income?

Paying preliminary tax on rental income (as an individual) will depend on whether you are considered a chargeable or non-chargeable person.

Non-Chargeable person:

You will be considered a non-chargeable person if you earn your income from a PAYE source of income and your total non-PAYE income does not exceed €5,000.

Non-chargeable persons who earn a rental income of less than €5k will not have to pay preliminary tax.

Chargeable person:

You are a chargeable person if you have a PAYE source of income and your net income from non-PAYE sources is greater than €5,000 per annum.

A chargeable person will have to register for self-assessment and submit a Form 11 annually to the Revenue Commissioner.

Chargeable persons will have all the responsibilities of a sole trader and will have to pay any preliminary taxes that are due on rental income.

Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.

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