Non-current liabilities
Learn what non-current liabilities are, see common examples, and how they sit on your balance sheet.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Non-current liabilities are debts your business doesn't have to settle for at least 12 months, such as long-term loans and lease liabilities
- Irish company accounts show them as “creditors: amounts falling due after more than one year”, below current liabilities on the balance sheet
- Any part of a long-term debt that's due in the next 12 months counts as a current liability
- Tracking them helps you plan repayments and show lenders your business can meet its future debts
What are non-current liabilities?
Non-current liabilities are debts your business owes that aren't due for settlement until at least 12 months after the balance sheet date. They're also called long-term liabilities.
In Irish company accounts, you'll see them listed as “creditors: amounts falling due after more than one year”. All three labels describe the same thing: money you'll repay over the longer term.
A distant due date still calls for attention now. You'll often make regular payments on a non-current liability, like a loan, during the year, so these debts belong in your planning from the start.
Examples of non-current liabilities
Most small businesses take on non-current liabilities when they borrow money or sign long agreements. Common examples include:
- long-term bank loans, such as a loan to buy premises or equipment
- the long-term part of lease liabilities on property, vehicles or machinery
- deferred tax liabilities, which reflect tax you expect to pay in future periods
- long-term provisions, for example, pension obligations
- director or shareholder loans with a written term of more than 12 months
- committed credit facilities with a repayment term of more than 12 months
Overdrafts and on-demand credit lines usually count as current liabilities, because the lender can ask for repayment at any time.
Leases now play a bigger part in this list. Financial Reporting Standard 102 (FRS 102) is the accounting standard many Irish companies use. Under the amendments to FRS 102, most leases go on the balance sheet for accounting periods starting on or after 1 January 2026.
You record each lease as a right-of-use asset and a matching lease liability. Short-term and low-value leases can be exempt.
Borrowing costs also shape how heavy a long-term loan feels over its life. The weighted average rate on new loans to Irish small and medium-sized businesses was 4.98% in Q1 2026, according to the Central Bank of Ireland.
How to tell if a liability is non-current
Under FRS 102, a liability is current unless, at the reporting date, you have an unconditional right to defer settlement for at least 12 months. When you do have that right, the liability is non-current.
To classify each liability on your balance sheet, work through these steps:
- Check the repayment dates in the loan or lease agreement
- Treat any amount due in the next 12 months as current
- Confirm you can defer the rest for at least 12 months without conditions
- Show the remaining balance as non-current
Picture a €60,000 five-year van loan, repaid at €12,000 a year and drawn down just before your year end. The €12,000 due in the next 12 months is a current liability, and the other €48,000 is non-current. Each year, the next €12,000 moves across to current.
Loan terms can also change the picture. A covenant is a condition in your loan agreement, such as keeping debt below a set level. If you breach one on or before the year end and the loan becomes repayable on demand, it's a current liability.
Current vs non-current liabilities
Both types of liability are money you owe, and the difference comes down to timing. Here's how they compare:
- Current liabilities fall due within 12 months, while non-current liabilities fall due after more than 12 months
- Current liabilities include supplier bills, VAT owed and overdrafts, while non-current liabilities include long-term loans and lease liabilities
- Current liabilities show your short-term cash needs, while non-current liabilities show your long-term financing commitments
- Current liabilities affect your liquidity, while non-current liabilities affect your gearing and long-term solvency
To see whether your short-term assets cover what's due this year, work out your current ratio. Long-term debt sits outside that calculation.
Where non-current liabilities appear on the balance sheet
On an Irish company balance sheet, non-current liabilities come after current liabilities and net current assets. They sit before provisions and capital and reserves.
The balance sheet formats in the Companies Act 2014 require creditors due within one year and after more than one year to appear separately. Long-term provisions, such as pension obligations, appear under their own provisions heading.
This split lets anyone reading your financial statements see what's due soon and what's due later.
Why non-current liabilities matter for your business
Non-current liabilities show you, and anyone lending to you, how much of your business runs on long-term borrowing. That picture feeds into several everyday decisions.
Repayments on long-term debt still leave your bank account every month. Adding them to your cash flow forecast shows whether you can cover them and still fund growth.
Your gearing ratio compares borrowing with the money owners have invested, so it shows how much of your business is funded by debt. Lenders read it alongside your solvency, your ability to meet long-term debts, when deciding whether to lend.
Well-managed long-term debt gives lenders confidence when you apply for new finance. New lease liabilities under FRS 102 can raise your gearing and shift covenant ratios, so check your loan terms before your 2026 year end.
Track your long-term liabilities with Xero
Xero keeps your long-term liabilities in view alongside the rest of your accounts. Bank feeds bring your transactions, including loan repayments, into Xero automatically.
Real-time balance sheet reports show what you owe now and what's due later. You can share your figures with your accountant or bookkeeper, so year-end classification is simpler for you both.
Pick a plan and get one month free to see your balance sheet update as you work.
FAQs on non-current liabilities
Here are answers to common questions about non-current liabilities.
Is a bank overdraft a non-current liability?
An overdraft is usually current, even if you've relied on it for years, because the bank can typically ask for repayment at any time. A term loan with a fixed repayment schedule is the usual way to hold borrowing as non-current.
What's the difference between non-current liabilities and non-current assets?
Non-current assets are things your business owns and expects to use for more than a year, such as property, vehicles and equipment. Non-current liabilities are what you owe over a similar timeframe, and many businesses use one to fund the other.
Are non-current liabilities bad for a business?
Long-term borrowing is a normal way to fund growth, such as buying equipment that earns money over several years. What matters is whether your cash flow comfortably covers the repayments.
Is deferred tax always non-current?
On an Irish company balance sheet, deferred tax liabilities usually appear under provisions for liabilities, below creditors due after more than one year. Your accountant can confirm how it's shown in your accounts.
Do sole traders have non-current liabilities?
Yes, a sole trader with a long-term business loan or lease has non-current liabilities, even without filing company accounts. The same 12-month test helps any business plan its repayments.
Related terms
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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.