Current vs non-current liabilities
Learn the difference between current and non-current liabilities, with Irish examples and 2026 lease rules.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- The difference between current vs non-current liabilities comes down to timing: debts due within 12 months of the balance sheet date are current
- A debt is only non-current if you already have the right, at the balance sheet date, to delay repayment beyond 12 months
- Irish company accounts show the same split as “Creditors: amounts falling due within one year” and “after more than one year”
- For periods beginning on or after 1 January 2026, most leases go on the balance sheet as a liability split into current and non-current parts
What are current and non-current liabilities?
Current liabilities are debts a business must settle within 12 months of the balance sheet date. Non-current liabilities are debts it has the right to settle later than that.
A liability is anything your business owes, whether to a supplier, a bank, Revenue or your staff. Both types appear on your balance sheet, where assets equal liabilities plus equity.
Non-current liabilities are also called long-term liabilities. Think of your household bills: next month’s electricity bill is current, while most of a 25-year mortgage is non-current.
How to tell if a liability is current or non-current
International Accounting Standard 1 (IAS 1) sets out the tests, and its 2024 amendments require the right to defer repayment to exist at the reporting date. Work through these checks for each debt; if any answer is yes, it’s current:
- Is it due for settlement within 12 months of the balance sheet date?
- Will you settle it within your normal operating cycle, the time it takes to turn stock and sales into cash?
- Do you hold it mainly for trading?
- Could the lender demand repayment within 12 months of the balance sheet date?
Planning to refinance a loan doesn’t change its category. The debt stays current until a signed agreement gives you the right to repay later.
Irish company accounts use their own labels for this split. The balance sheet formats in the Companies Act 2014 show “Creditors: amounts falling due within one year” and “Creditors: amounts falling due after more than one year”.
On accounts filed with the Companies Registration Office (CRO), the first heading holds your current liabilities and the second your non-current ones.
Examples of current liabilities
Most of the debts you deal with day to day fall into this group. Typical current liabilities for an Irish small business include:
- money you owe suppliers, known as accounts payable
- short-term loans and bank overdrafts
- the current portion of long-term loans, meaning repayments due in the next 12 months
- wages owed and accrued expenses, such as utilities you’ve used but haven’t been billed for
- value-added tax (VAT), Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC), and corporation tax owed to Revenue
- deferred income, which is money you’ve received for pre-sold goods and services
Tax debts come round often. Most businesses pay VAT every two months, and employers pay PAYE, PRSI and USC monthly.
Bank overdrafts appear in the list of current liabilities from AccountingTools.
Examples of non-current liabilities
These are debts you’ll repay over several years, so they shape your long-term financial position. Common non-current liabilities include:
- long-term bank loans, excluding repayments due in the next 12 months
- the portion of lease liabilities due after 12 months
- deferred tax liabilities, which IAS 1 always places in non-current
- long-term provisions, such as a legal claim you expect to settle in a few years
- pension obligations to current or former employees
A credit line the bank can call in at any time belongs with current liabilities, because you don’t have the right to delay repayment for 12 months.
Key differences between current and non-current liabilities
Timing drives every other difference between the two groups. Here’s how they compare in practice:
- Current liabilities fall due within 12 months, while non-current liabilities fall due later
- Current liabilities sit under “amounts falling due within one year”, while non-current ones sit under “after more than one year”
- Current liabilities test your ability to pay short-term bills, while non-current ones reflect your long-term solvency
- Current liabilities are mostly supplier bills, tax, wages and overdrafts, while non-current ones are mostly loans, leases, deferred tax and pensions
How the 2026 FRS 102 lease changes affect liabilities
If you lease premises or vehicles, your balance sheet may look different from 2026. Under Financial Reporting Council (FRC) amendments to Financial Reporting Standard 102 (FRS 102), most leases go on the balance sheet for periods beginning on or after 1 January 2026.
You record a lease liability alongside a right-of-use asset, and lessees treat all leases the same way. The FRC lets you keep short-term leases of less than 12 months and leases of low-value assets off the balance sheet.
Your lease liability then splits in two. On a five-year van lease, the payments due in the next year sit in current liabilities and the rest sit in non-current.
Because these new liabilities raise your total debts, talk to your accountant and lender before your first year end under the new rules.
Why classifying liabilities correctly matters
Lenders and your accountant use the split between current and non-current to judge whether you can pay your bills. The Corporate Finance Institute sets out the current ratio formula as current assets divided by current liabilities.
A higher current ratio means more short-term assets to cover each euro of short-term debt. Your working capital is the gap between the two figures.
Say your café has current assets of €90,000 and current liabilities of €60,000. Your current ratio is 1.5 (€90,000 ÷ €60,000), and your working capital is €30,000.
Now say €20,000 of loan repayments due this year were left in non-current by mistake. Moving them across lifts current liabilities to €80,000, cutting your ratio to 1.125 and working capital to €10,000.
Getting the split right helps you:
- give lenders accurate figures when they check your loan covenants
- plan cash for the tax and loan payments due this year
- spot a cash squeeze while you still have time to act
- compare your figures fairly from one year to the next
Keep track of your liabilities with Xero
Knowing which debts fall due this year makes planning simpler. Xero’s bank feeds keep your figures up to date, and the balance sheet report groups current and non-current liabilities for you.
You can share the same live numbers with your accountant, so year-end classification takes less back and forth. Try Xero and get one month free to see exactly where your business stands.
FAQs on current vs non-current liabilities
These answers cover common classification questions from Irish business owners.
Is accounts payable a current or non-current liability?
Accounts payable is almost always current, because you normally pay suppliers within your operating cycle. If a supplier agrees in writing to terms longer than 12 months, that portion becomes non-current.
How do you classify a long-term loan with repayments due this year?
Split it: repayments due within 12 months of the balance sheet date go in current liabilities, and the balance stays in non-current. Your lender’s repayment schedule shows where to draw the line.
Are contingent liabilities current or non-current?
A contingent liability, such as a possible legal claim, usually sits in the notes to your accounts rather than on the balance sheet. Once payment becomes probable and measurable, it becomes a provision classed by when it’s due.
Where do current and non-current liabilities appear on the balance sheet?
Current liabilities come straight after current assets and are deducted from them to give net current assets. Non-current liabilities appear further down, just before provisions and capital and reserves.
Can a liability move from non-current to current?
Yes, as time passes, repayments that were more than 12 months away move into current each year. A breached loan covenant can also make the whole loan repayable on demand, which turns it current straight away.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.