Hong Kong provisional salaries tax: reading your bill and applying for holdover

A salaries-tax bill can ask you to settle the balance for 2025/26 and pay provisional tax for 2026/27 at the same time. If your income has fallen, separate those two amounts before deciding what to do. You may have grounds to apply for holdover of provisional salaries tax, but a smaller salary this month doesn't automatically reduce the bill.

Start with the assessment year, the computation and the payment dates on your own demand note. That gives you a much better starting point than a general tax calendar or a percentage taken from your latest payslip.

Separate final tax from provisional tax

Final salaries tax settles the liability for an assessment year after your income and claims have been assessed. Provisional salaries tax is a payment towards the following year's liability. The Inland Revenue Department (IRD) shows the final and provisional computations separately, together with the instalment amounts and due dates, on its individual demand note.

For a bill covering 2025/26 final tax and 2026/27 provisional tax, the years cover 1 April 2025 to 31 March 2026 and 1 April 2026 to 31 March 2027 respectively. Read each column on its own terms. A job change in August 2026 belongs to the second period; it doesn't rewrite what you earned in the first.

Previously paid provisional tax is taken into account when the relevant final liability is settled. Also check the tax reduction shown in the final computation. The enacted 2025/26 reduction is capped at HK$3,000, and it doesn't cancel the obligation to pay provisional tax. These distinctions appear in the IRD's 2026–27 Budget guidance.

An error in the final assessment may require an objection or another appropriate correction procedure. A request to hold over provisional tax addresses a different part of the bill. Keep the two questions separate even if you need to raise both with the IRD.

Check the ground and estimate the whole year

One common ground for salaries-tax holdover is that your estimated net chargeable income for the provisional year is below 90% of the relevant comparison amount. This can be the preceding year's net chargeable income or the estimated amount on which provisional tax was charged. Net chargeable income is calculated after the relevant deductions and allowances; it isn't the gross salary deposited into your bank account.

That means a 10% pay cut is not a complete eligibility test. The date of the cut, earlier bonuses, another job and changes in allowable claims can affect the result. Use the correct allowance amounts for each assessment year, too.

Build the estimate in two parts: income already earned since 1 April, and income reasonably expected through the following 31 March. A salary-reduction letter helps explain a change, but the application also needs a credible annual estimate. If a bonus is uncertain, explain the assumption instead of leaving it out.

Other grounds can include an allowance entitlement that wasn't taken into account, ceasing to earn salaries-tax income, or an unsettled objection against the preceding year's assessment. The IRD's objections and holdovers guide explains the grounds. Check which one fits your facts before choosing a box on a form; a temporary cash shortage alone needs a different discussion about payment arrangements.

For example, someone who leaves a job halfway through the year should include the salary already earned and assess any further income expected before 31 March. Using the new monthly salary multiplied by twelve would miss part of the year's earnings. The current IR1121 application separates income received from income still expected for this reason.

Calculate the deadline from your demand note

The application deadline is the later of 28 days before the provisional-tax payment due date and 14 days after the notice was issued. Use the issue date, rather than the day you happened to open the envelope, and check the particular instalment you want held over. The IRD holdover FAQ explains both parts of the rule.

Consider this fictitious example. A notice is issued on 18 September 2026 and the relevant provisional-tax payment is due on 18 January 2027.

These dates illustrate the calculation, not a deadline for every taxpayer. A different issue date or instalment date changes the answer. If another provisional instalment falls due later, check its deadline separately rather than assuming the first application covers everything.

When both calculations give the same deadline

The two dates can also coincide. In the IRD's FAQ example, a demand note is issued on 4 January 2027 and the first instalment of provisional tax is payable on 15 February 2027.

The holdover application for that first instalment must therefore be lodged on or before 18 January 2027. See IRD holdover FAQ, question 8.

Send a supported application and check the decision

You can use IR1121 or another valid written application. Identify your tax file and charge number, the provisional year, the amount concerned and the ground relied on. Include the annual computation and documents that explain it, such as payslips and an employer's letter confirming a pay cut, retirement or termination. An allowance or deduction claim needs its own relevant details and evidence.

Use a submission method accepted in the current form or official guidance, sign where required, and keep a copy with evidence of submission. Don't rely on a note in an earlier BIR60 as your holdover application. The return and the written holdover request have different purposes.

Applying doesn't give you permission to withhold payment yourself. Check the IRD's decision, the amount held over and what remains due. If payment is approaching and you haven't received a decision, contact the IRD promptly. Holdover can change the amount you must pay provisionally; your eventual liability still depends on the final assessment.

If you want help checking the ground, estimate and dates, contact IMSG with the assessment year, relevant due date and a short account of what changed. We can scope the work through tax advice. A holdover application is separately scoped from individual return preparation.

This article provides general Hong Kong tax information. Your assessment, circumstances and the IRD's decision determine the position in your case.