The self-assessment system for Capital Gains Tax applies to anyone who is self employed, a director of a company, or has income not taxed through the PAYE system.
It also applies to anyone with capital gains even if all their income is taxed PAYE.
A payment on account, known as preliminary tax, for the initial period ended 30th November 2010 must be paid by 15th December 2010 (or 16th November for filing via ROS).
The amount of preliminary tax payable each year is the taxpayer's estimated tax liability after giving a credit for any tax deducted at source and other credits.
All taxpayers, with some exceptions outlined below, must:
1) Pay preliminary tax on or before 31 October of each year. Preliminary Capital Gains Tax payments for the tax year ending 31 December 2010 should be paid as follows:
- gains made between 1st January 2010 and 30th November 2009 on or before 15th December 2010 and
- gains made between 1st December 2010 and 31st December 2010 on or before 31st October 2010.
2) There is a provision for the payment of preliminary tax in installments by means of a direct debit.
3) Make a tax return on or before 31 October each year. A tax return, showing details of all gains for the tax year ended 31st December 2009 must be submitted on or before 31 October 2010 or 16th November 2010 if filing on line using ROS.
4) If the preliminary tax paid for 2009 is insufficient, pay the balance of tax due for 2009 on or before 31st October 2010.
5) The exceptions are:
a) Anyone, other than directors and their spouses, who pay all their income tax under the PAYE system and who does not have a capital gains tax liability.
b) Anyone who has been advised by their Inspector of Taxes that they are not liable to pay preliminary tax and who does not have a capital gains tax liability.
PENALTIES
You will be charged interest if preliminary taxes are not paid on time.
You will also be charged interest if your preliminary income tax payment is less than 90% of the final income tax liability for the year, or 100% of the previous year's agreed income tax liability, whichever is lower. As mentioned above, you also have the option to pay 105% of the pre- preceding year.
Interest will be charged on preliminary CGT payments which are less than 100% of the final CGT liability for the year.
If you fail to make a tax return before 31st October you will suffer a surcharge on your tax liability. Directors and their spouses who fail to make a tax return on time will incur the surcharge on their tax liability ignoring the tax paid under PAYE.
The surcharge payable on the submission of late returns is 5% of the tax liability where the return is filed within two months of the deadline.
If the return is filed more than two months after its proper filing date a 10% surcharge will apply.
A sample of returns will be subjected to a detailed Revenue audit.
If you require more information please consult your tax advisor or email us at tax@fixmytax.com.
