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 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.
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 where payments on account must be made.
Payments on account for large companies are generally made in four equal instalments with the first payment due 6 months 13 days after the start of the accounting period. This payment should equal 25% of the estimated tax liability based on profits at that date. The second and third quarterly payments are due respectively 9 months 13 days and 12 months and 13 days after the start of the accounting period. The final payment is due 3 months and 14 days after the end of the accounting period.
Each quarterly payment should represent 25% of the company’s estimated tax liability for the 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 profits exempt from UK corporation tax. However, the election is irrevocable. Therefore, it is extremely important professional advice is obtained before any election is put in place. If you operate through the medium of a limited Company in Ireland the payment date for corporation tax has become more streamlined and all small companies (where the company’s corporation tax liability for the prior year was < €200,000) will be required to have paid either 90% of their expected corporation tax liability for the current period or they can opt to pay 100% of the prior year liability by the 21st of the month prior to the end of their accounting date to the Collector General. If the company is a large company (where the company’s corporation tax liability for the prior year was > €200,000) then the payment is due in instalments. The First Instalment is payable in the 6th month of the accounting period by the 21st of that month. The amount payable should be 50% of Corporation Tax liability for the preceding accounting period or 45% of Corporation Tax liability for the current accounting period. The Second Instalment is due on the 21st date of the eleventh month of the accounting period and the amount payable will bring the total preliminary tax paid to 90% Corporation Tax liability for the current accounting period.
The balancing payment of Corporation Tax for all companies is due to be paid to the Collector General by the 21st of the ninth month after the year end.