The 90%, 100%, and 105% safe-harbour rules.
Minimum to avoid interest
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90% current
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100% prior
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105% pre-preceding
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Shortfall
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Interest, per day
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Your breakdown
Updates live as you type| Safe harbour | Basis | Amount |
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Three ways to clear the hurdle
Preliminary tax is the payment a self-assessed taxpayer makes towards the current year’s income tax bill, due alongside the balance for the previous year. Revenue does not ask you to forecast the exact figure. Instead it gives you three safe harbours, and meeting any one of them means no interest is charged if your eventual liability turns out higher.
The three tests are 90 percent of your final liability for the current year, 100 percent of your prior-year liability, and 105 percent of the pre-preceding year, with that last one open only to people who pay by monthly direct debit. Because clearing any single test is enough, the smallest of the available figures is the minimum you must pay. This calculator works out all three and reports the lowest one for you.
Why a rising year favours the 100 percent rule
The 100 percent option is the quiet workhorse here, because it locks in last year’s number regardless of how well the current year is going. Suppose you expect a final liability of €30,000 this year, up from €20,000 last year, and you do not pay by direct debit. The 90 percent test wants €27,000. The 100 percent test wants only €20,000. You pay the lower figure, €20,000, and stay fully inside the rules even though your real bill will be half as much again.
When the 105 percent option is worth it
The third test only opens up if you spread your preliminary tax across the year by monthly direct debit. It lets you base the payment on 105 percent of the pre-preceding year, which can be the smallest of the three when income has been climbing steadily for two years running. Tick the direct debit box in the tool to bring this figure into the comparison. For a once-off lump payment at the filing deadline, it does not apply and the calculator marks it as not available.
One thing the safe harbours do not protect you from is the balance. They only stop interest on the preliminary tax itself. If your final liability comes in above what you paid, the shortfall is still due by the following 31 October, and statutory interest of roughly 0.0219 percent a day, close to 8 percent a year, runs on anything paid late. The tool shows that daily interest cost on any shortfall against your planned payment, so you can see the price of underpaying.
This calculator suits sole traders, landlords, company directors, and anyone else inside the self-assessment system who files a Form 11. Here is the judgement call that matters most. If your income is volatile, lean on the 100 percent prior-year rule, because it is a fixed and certain number you cannot get wrong, whereas the 90 percent test depends on a current-year estimate that can drift as the year unfolds.
What happens in my very first year of trading?
In your first year there is no prior-year liability to fall back on, so the 100 percent and 105 percent options are effectively zero. You are left with the 90 percent current-year test, which means you do need a reasonable estimate of the year’s profits. Many people in year one pay preliminary tax based on a careful projection and then settle any difference the following October.
Does paying more than the minimum cause any harm?
No. Overpaying preliminary tax is not penalised, and any excess is set against your final bill or refunded after the return is filed. Some people deliberately pay a little extra to be safe, though that does tie up cash you could otherwise hold until the deadline.