If you are self-employed in the UK, you will be required to submit a tax return by 31 October (for manual returns) or 31 January (for online returns) following the end of the tax year (5 April) under the self-assessment arrangements and pay any tax becoming due to the Collector of Taxes.
Tax is paid on 31 January and 31 July of each year with January being the time for paying the balance of tax for the previous tax year and also the 1st payment on account for the current year. The July payment is the 2nd payment on account for that same tax year. Payments on account are calculated at 50% each of the previous year’s tax liability.
These payments can be lowered if you know your tax bill is less than in the previous year.
If you choose to open a place of business in Ireland you will be liable to Irish tax on the profits of your Irish business, as detailed in section 1.22. These profits are also part of your UK self- assessment return but you will receive credit under the double taxation agreement for the element of profits taxed twice.
If you operate through a Company in Northern Ireland, tax will have to be paid electronically to the Collector of Taxes in Shipley, Bradford. UK Corporation tax is generally payable 9 months and 1 day after the Company’s year end, however special rules apply to large companies whereby the company will be required to pay its corporation tax liability in instalments.
Payments on account are generally made in four equal instalments with the first payment due 6 months 13 days after the start of the accounting period. The second and third payments on account are due respectively 9 months and 13 days and 12 months and 13 days after the start of the company’s accounting period. The final payment is due 3 months 14 days after the end of the accounting period. Each quarterly payment should represent 25% of the company’s expected corporation tax payable per accounting period.
If you operate through the medium of a limited company in the UK and choose to open a branch in Ireland, the branch profits will be liable to tax in Ireland (as well as in UK with double taxation relief). UK companies can elect to have their foreign branches exempt from UK corporation tax. However, the election is irrevocable. Therefore, it is extremely important professional advice should be obtained before any election is put in place. Corporation tax in Ireland has become more streamlined and all companies will be required to have paid 90% of their expected corporation tax liability one month prior to the end of their accounting date. There are special rules relating to small companies – where the company’s corporation tax liability for the previous year was < €200,000 they can opt to pay their preliminary tax based on 100% of their prior year liability. Corporation tax is also paid to the Collector General.
Section 18 highlights some of the issues to be considered re Brexit with regards to the movement of people.