How to comply with your tax obligations
Whether you are employed as a PAYE worker or pay tax as a self-employed person you must make sure that you pay any tax that is due to Revenue. This document focuses on information for PAYE workers or pensioners who have another source of income.
If you work for an employer and pay tax under the PAYE system income earned from employment is taxed at source by your employer. However, the amount deducted can vary depending on your personal circumstances and your tax credits. For example, if you are married or in a civil partnership, this may affect your tax bands and tax reliefs.
People who work for an employer may also have additional income from other sources. You must tell Revenue about such income. However, depending on the amount, you declare the income in different ways. In some cases, income from other sources (such as a social welfare payment) can be coded in against your tax credits and cut off point. Coding in means that Revenue will reduce both your tax credits and your standard rate cut-off point, by an amount equal to your other income. Your other income is then effectively taxed under PAYE.
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Compliance Code for PAYE tax payers
You should make sure that Revenue is aware of the factors that may affect the amount of tax deducted from your earnings. Do not assume that Revenue has access to up-to-date information about your circumstances. Revenue’s Compliance Code for PAYE Tax Payers (pdf) advises you to:
- Check your Tax Credit Certificate each year and make sure that you are entitled to the tax credits that have been allocated to you and that you are claiming any tax credits you may be entitled to. You can use Revenue’s PAYE Online Services to view or print your Tax Credit Certificate.
- Tell Revenue about any changes in basic personal details such as a change of address as well as changes in your circumstances that may affect your entitlement to a tax credit(s). In particular you should tell Revenue about significant life events such as marriage or civil partnership or bereavement as soon as possible.
- Keep all relevant documentation (such as medical receipts) to support your claims for tax credits, reliefs and allowances. You must keep all supporting documentation for 6 years from the end of the year to which the claim or liability refers.
- Inform Revenue of any non-PAYE sources of income you have such as rental income, dividends, Department of Social Protection payments and pensions. Any additional non-PAYE income may be subject to tax, PRSI or Universal Social Charge (USC) and it is important that you pay any tax that is due to avoid building up a tax liability.
If you are a chargeable person you must self-assess. Self-assessment is where you are responsible for making your own assessment of tax due.
Who is a chargeable person?
You are a chargeable person if you have a PAYE source of income and, either:
- Net assessable non-PAYE income (including income subject to DIRT) of
€5,000 or more in a year
- Total gross income from non-PAYE sources (including income subject to DIRT), of €30,000 or more in a year. This applies even if you have no tax liability on this income because it is covered or largely covered by losses, capital allowances and other reliefs.
If you are a chargeable person you must self-assess and file a Form 11 for the relevant year. From 2014 if you are a chargeable person you must also pay PRSI at Class K on your assessable income.
Who is not a chargeable person?
If you have a PAYE source of income and your net assessable non-PAYE income is less than €5,000, and this income is coded against PAYE tax credits or fully taxed at source, you are not regarded as a chargeable person (provided your gross non-PAYE income before expenses does not exceed €30,000).
However you must inform Revenue of this income. You can do this using PAYE Online Services, by contacting your local Revenue office, or by filing a Form 12, or Form 12S (a simplified version for routine tax returns - see 'How to apply' below). You do not have to pay PRSI on this income. Form 12 or Form 12S allows you to complete a return of your income and claim tax credits, allowances and reliefs (including any health expenses) for a year. You do not have to file a Form 12 or Form 12S unless Revenue have asked you to do so.
If you have a State pension and another pension or form of income which brings your income over the exemption limit for people aged over 65 you must file a Form 12 or Form 12S if you are not already being taxed on this income. The limits are currently €18,000 for a single person and €36,000 for a married couple or civil partners.
Pay and File system
Under self-assessment there is a common date for the payment of tax and filing of tax returns. This is 31 October each year. This system, which is known as Pay and File allows you (or an agent) to file your return and pay the balance of tax outstanding for the previous year at the same time. Under this system you must:
- Pay preliminary tax for the current tax year on or before 31 October each year – the deadline for people who file online using the Revenue Online Service (ROS) is usually slightly later. In 2021, the deadline for people who pay and file online is 17 November.
- Make your tax return after the end of the tax year but not later than the following 31 October.
- Pay any balance of tax due for the previous tax year on or before 31 October.
- Pay any Capital Gains Tax on disposals made between 1 January and 30 September of the current tax year.
Note that the rules about self-assessment changed for the year 2013. In previous years Revenue would assess your liability for tax on the basis of the information you entered in your income tax return.
From 2013, your annual return of income form – Form 11– includes a self-assessment section which you (or your agent) must complete and sign. If you do not make this self-assessment you will be liable to a penalty of €250. However, you do not have to make a self-assessment if you returned the completed Form 11 on or before 31 August in the year following the year of assessment. If you filed your completed return on or before that date Revenue will make the self-assessment on your behalf. If you use ROS, the system can calculate your tax liability based on the information you input and you can then choose to use this in your self-assessment.
How to apply
If you are a chargeable person, you must make your income tax return and self-assess your tax liability. You have the following options:
- You can file your Form 11 using Revenue’s Online System (ROS). Certain people must e-file using ROS.
- You can fill out a paper Form 11 (pdf) and send to Revenue
Revenue also provide a guide to self-assessment on their website.
You must file a Form 12 if Revenue have asked you to do so. If you are not a chargeable person but you want to pay any tax due on your non-PAYE income you can file a form 12. There are 3 options:
- You can fill out a paper Form 12 (pdf) and send it to Revenue.
- You can complete the eForm12 – this electronic form is available through Revenue's myAccount service. You only need to fill in the parts of the form that are relevant to you. The eForm 12 does not provide for returning Capital Gains Tax details. You must fill out a separate CGT return.
- You can fill out Form 12S (pdf) – this is a simplified return for PAYE taxpayers.