A quick  guide to Income Tax Returns for the Self-Employed

For self-employed individuals in Ireland, the clock is ticking on their annual self-assessment tax return. With the official deadline of October 31st, 2024 looming, understanding the process and navigating the complexities can feel overwhelming. The extended Pay and File deadline is 14 November 2024 for filing return through ROS (Revenue Online System). In this short guide, we will show you the steps necessary to complete your return efficiently and avoid any penalties.

Registration: The First Step

Before diving into your return, ensuring you're registered for Revenue Online Service (ROS) is crucial. This online platform streamlines the self-assessment process, allowing you to file your return, make payments, and access your tax account.

The registration process involves three key steps:

1. Obtaining your ROS Access Number (RAN): The first step involves applying online for a RAN, which will be mailed to your postal address.

2. Securing your Digital Certificate: Once you have your RAN, head to www.revenue.ie and use it to apply for your digital certificate. Answer the prompts and complete the sections carefully. Upon completion, a ROS system password will arrive via mail. This password allows you to retrieve your digital certificate, which you should then name and password-protect for security.

3. Accessing ROS: After retrieving your digital certificate, you're ready to access ROS. This platform allows you to file your return, manage payments, and maintain your tax account. Keep in mind that the entire registration process can take up to 10 business days, so act promptly if you haven't registered yet.

Understanding Your Tax Liability

Unlike PAYE (Pay As You Earn) employees, self-employed individuals are responsible for calculating the tax they owe. While ROS performs the final calculations based on the information you input, understanding the components of your tax liability is essential.

Key Tax Elements:

  • Balance of Income Tax Payable from 2023: This reflects any outstanding income tax from the previous year.

  • Preliminary Tax Liability for 2024: This is an estimated tax payment for the current year, typically set at 90% of your final 2023 tax liability.

Claiming Business Expenses

The good news is that you can reduce your tax liability by claiming certain business expenses. These expenses can include:

  • Rent for your workspace (office, studio, etc.)

  • Utilities (lighting, heating)

  • Accounting fees

  • Interest paid on business loans

Completing Your Return Online

Once registered, you'll need to fill out Form 11 online through ROS. This form guides you through the process of declaring your income and claiming eligible deductions. Remember, while ROS handles the calculations based on your input, it's crucial to maintain records of supporting documents like invoices, bank statements, and receipts. These documents may be requested by Revenue in the event of an audit.

Tax Rates and Credits

The tax rates for self-employed individuals are identical to those for PAYE workers:

  • Single: The first €40,000 is taxed at 20%, with the remaining income taxed at 40%.

  • Married/Civil Partnership (One Income): The first €49,000 is taxed at 20%, and the remaining income is taxed at 40%.

  • Married/Civil Partnership (Two Incomes): For joint assessments, the calculation is slightly more intricate, but generally results in a lower combined tax burden compared to two single people filing separately.

On top of income tax, self-employed individuals also contribute to Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) based on their gross income. However, a benefit for self-employed individuals is the Earned Income Tax Credit of €1,875, which ROS automatically deducts when calculating your final tax liability.

The Importance of Timely Filing

Missing the deadline for filing your tax return can have significant consequences. Here's what you need to know:

  • Late Filing Penalty: A financial surcharge is added to your tax obligation for late submissions. Within 2 months of the deadline, the penalty is 5%. Exceeding 2 months incurs a 10% surcharge and interest charges on the outstanding tax at an annual rate of approximately 10%.

  • Increased Audit Risk: Late filing can raise red flags at Revenue, potentially triggering a tax audit of your financial affairs. Needless to say, this is a scenario best avoided.

Remember, ROS simplifies the process by guiding you through the calculations. However, maintaining accurate records and meeting deadlines are crucial for a smooth tax filing.


If you have any queries in relation to your tax return you can contact us at enquiries@nkc.ie

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