Computation of Amount for 2011 Preliminary Tax as shown on 2010 Notice of Assessment

A number of queries have arisen with regard to the calculation of the Amount for 2011 Preliminary Tax (PT) that appears on the 2010 Notice of Assessment.

The adjustment for the Amount for 2011 Preliminary Tax is to replace the amount of income levy and the health contribution due on the 2010 income with the amount of Universal Social Charge (USC) that would have been due on that income had the USC been in place for that year. No other adjustment is made to the 2010 figures e.g. the 2010 tax credits are used and not the 2011 tax credits, etc.

RICT / Film Relief

The PT 2011 amount has not been adjusted to disallow any amount of this relief. Where necessary, any adjustment required to add-back the amount of the relief granted in the year 2010 must be made manually, as was the position heretofore.

PAYE Income

Where there is PAYE income included in the assessment, the notional USC is calculated on the total income less the amount of PAYE income. For the purpose of calculating the Amount for 2011 Preliminary Tax, it is taken that the correct amount of USC would have been deducted on this income at source. The PAYE income is only taken into account in determining the rate of USC to apply.

Transborder Relief

The 2011 Preliminary Tax calculation is not correct where there is Transborder Relief due – it is overcharging the amount of USC. Unfortunately it is not possible to fix this by the Pay and File deadline. If a customer has paid adequate preliminary tax (i.e. 100% of actual 2010 liability), but not paid an amount equal to or greater than Amount for 2011 Preliminary Tax, the due date for the balance of tax for 2011 may have to be amended. Revenue will review these cases and amend the due date. However if practitioners wish to draw Revenue’s attention to this when submitting the 2011 return they may do so using the additional notes field in the Personal Details screen (and ticking the box to indicate that a manual adjustment is required to the return). Note the 90% of 2011 liability and the 105% of 2009 liability (when paying by direct debit) are not affected by this issue.