All self-employed people, including individuals with revenue streams from all sources e.g. rental income and foreign investments, must make a self-assessment to Revenue. While it’s easy to see self-assessment in a negative light, the self-assessment process can actually give you greater control over your taxes and empower you to better manage your business-related finances.
What is self-assessment?
Self-assessment is the process of making your own assessment of your tax liability to Revenue. This system, known as ‘Pay and File’ allows you to file your tax return and pay any balance of tax due to the Revenue Commissioners. This can be done via the Revenue Online System known as “ROS” or via a paper return.
Who must self-assess?
If you are self-employed, meaning you operate your own business for income, including farming, you must self-assess. Additionally, anyone receiving income from sources where some or all tax is not collected through PAYE must make a self-assessment. For example, you must self-assess if you receive:
• rental income
• investment income
• foreign income or foreign pensions, including interest on foreign bank accounts
• profit from exercising share options
• fees or other income not included in PAYE
Do I still file a tax return?
Yes, once you are in receipt of income outside of your PAYE income (regardless if you are making a profit or loss), you must file a tax return. If you’re struggling with filing tax returns, utilise a smart, affordable tax return service like Tax Return Plus
How do I register for self-assessment?
Where a source of income other than PAYE income commences, you are required to advise your local Revenue office by filing Form TR1, which is Tax Registration for Sole Traders, Trusts and Partnerships. This form enables self-employed people and business owners to register for income tax, employers PAYE/PRSI/USC, VAT and relevant contracts tax as a principal contractor.
Can I opt out of self-assessment?
No, if your circumstances qualify you for self-assessment, you must file an income tax return by 31st October each year. However, if you cease your trade or are not in receipt of any other income (apart from your PAYE income), you may de-register from self-assessment.
I’m doing a self-assessment for the first time—when is my return due?
If you have recently commenced an income activity that qualifies you for self-assessment, you have until the filing deadline of the second year to submit a tax return. It’s advisable to file tax returns on time to avoid any surcharges, interest or penalties.
What if I make a mistake in my self-assessment?
If you realise you made a mistake after submitting the form, you can still amend your self-assessment. If you filed your tax return and self-assessment electronically through ROS, you must amend your return through ROS as well.
If you filed a paper return, contact your local district or tax agent to request an amendment. Note that you must state the reason you require an amendment, such as to correct an error in your original return.