OCTOBER 1st, the date for payment of residential property tax may be making all the headlines, but as every self employed person knows, November 1st, the date when preliminary tax falls due, is a far more important self assessment deadline.

Preliminary tax must be paid by anyone who earns an income but falls outside the PAYE tax category of employee, or by PAYE taxpayers who also have an income from another source say, rental property or other investments.

Anyone who is liable for preliminary tax must pay it for the year of assessment, i.e. 1996-97 and it must amount to either 90 per cent of the final tax payable for that year or 100 per cent of the final tax payable for the previous year, which does not include any reliefs claimed under schemes like BES or Section 35 film investment schemes. People who miss the tax deadline or do not pay sufficient preliminary tax can expect to be charged ongoing interest of 1.5 per cent per month from November 1st until the date they pay the tax.

Frank Hussey is a tax partner with McGrath & Company, Chartered Accountants and has produced a simple to follow question and answer sheet about preliminary income tax. Perhaps the most pertinent question is the one that reads: "How can I reduce my tax payment?" He offers the following four suggestions, noting that taking up any one of them means that you can base your preliminary tax on 90 per cent of the current year's liability:

. Investment in a film company: A person can get a deduction for investment of up to £25,000 against their taxable income by investing in the Irish film industry before April 5th, 1997.

. BES relief: If you invest in a business expansion scheme company before April 5th, 1997, a maximum of £25,000 is available as a tax deduction i.e. representing a reduction in your preliminary tax payment of £25,000 at 48 per cent or £12,000.

. Urban renewal: If you have substantial income, you might consider purchasing an urban renewal property before April 5th, 1997 and letting it by that date in order to shelter this income and reduce your preliminary tax payment accordingly. A claim of excess capital allowances can be offset against all income in year one and any loss carried forward against rental income in future years.

. Pension contributions: Selfemployed people can make a contribution of up to 15 per cent (20 per cent if over age 55) of their net relevant earnings to a personal pension fund before January 31st, 1998 and qualify for relief for 1996/97. This contribution will reduce the preliminary payment due on November 1st if the preliminary payment is based on 100 per cent of the previous year. Employed people in a company pension scheme may wish to consider making an AVC (Additional Voluntary Contribution) to maximise the relief before April 5th, 1997.

Anyone with a preliminary tax liability is required to file their actual income tax returns on or before January 31st following the year of assessment and any balance of tax is due before April 30th, says Mr Hussey. "Thus for 1996/97 the return is due before January 31st, 1998 and the balance of tax payable before April 30th, 1998."

The notice of preliminary tax (usually sent out in late August) and a cheque for the correct amount needs to be sent to the Collector General by November 1st. You can pay your tax by direct debit and spread your payments out over the year, explains Mr Hussey, but the Revenue insist that it be based on 105 per cent of the previous year's tax liability.

Many self employed people hire an accountant to deal with their preliminary tax liabilities and to file their returns in January. The majority no doubt believe the cost of the accountant's fee is money well spent (and tax deductible ).

The alternative is to deal directly with the Revenue Commissioners, through the network of Inspectors of Taxes who will advise members of the public on how to complete the forms and calculate the amount of tax owed. Many readers have informed us over the years that their local inspectors have been extremely thorough and helpful and the experience was not as nerve wracking as expected.