Director of Ltd Company - Not sure if I meet the requirements?

[thisisbox]

Hello.

I'm a british citizen and my wife is now going to apply for ILR under the 5-year route.

I plan on using income as a company director (my own company) from the last financial year, but I'm a bit confused on whether I meet the financial requirements. I'm hoping someone can clear this up for me.

1. I pay myself PAYE and dividends which are over the £18.6k threshold - correct me if I'm wrong, but am I right in saying that I cannot use this to meet the financial requirement; instead I have to use the income from my company?

2. In which case, do I use my company's Gross Profit (£27k) or do I use the Profit Before Tax (£8.5k)?

3. I also have enough cash in my company account to sustain an income for the foreseeable future - will this be considered too?

Any advice will be appreciated. Thanks.

[albertrw]

You will be assessed on the salary and dividends from the company's last full accounting year, as long as those are over the £18.6k you're ok. Ask your accountant if you're unsure.

The net profit and gross profit are irrelevant, you could have a net loss and still meet the requirement. It's the money paid to you which matters.

Ref point 4 no forecasts are exepcted or assessed.

[thisisbox]

You will be assessed on the salary and dividends from the company's last full accounting year, as long as those are over the £18.6k you're ok. Ask your accountant if you're unsure.

The net profit and gross profit are irrelevant, you could have a net loss and still meet the requirement. It's the money paid to you which matters.

Ref point 4 no forecasts are exepcted or assessed.

Thanks for your reply.

If that's the case, why would they need to see my company accounts?

Also, if my company made £0 or even a loss for the financial year, how would that meet the requirement? Do they not assess directors on their company earnings?

Because if a company doesn't make any money, how would it be able to provide an income for the employee/director?

I'm not disputing what you've said; I'm just trying to understand it correctly because it's a bit confusing to me.

[albertrw]

Hey

Well I’m not an expert on visa applications in general so I am just offering my interpretation! But I am a qualified accountant. I think they want the company tax return to cross reference the directors salary to the tax returns actually filed with HMRC.

Re the other point about losses etc - bear in mind that legally the Ltd Co and you are two separate entities! The question of profit extraction for owner managed businesses is really beyond the scope of the ILR application and not worth worrying about. Loss making companies can pay salaries to their employees , it’s very common. Eventually they will run out of money of course…

[thisisbox]

Hey

Well I’m not an expert on visa applications in general so I am just offering my interpretation! But I am a qualified accountant. I think they want the company tax return to cross reference the directors salary to the tax returns actually filed with HMRC.

Re the other point about losses etc - bear in mind that legally the Ltd Co and you are two separate entities! The question of profit extraction for owner managed businesses is really beyond the scope of the ILR application and not worth worrying about. Loss making companies can pay salaries to their employees , it’s very common. Eventually they will run out of money of course…

Ok thanks. So providing that I can prove that my PAYE and dividends meet the ILR requirement, I need not worry about how much my company made in the relevant financial year?

[zimba]

Have you read the guide ?? https://assets.publishing.service.gov.u ... rement.pdf

Checkout the section titled: Director or employee of a specified limited company in the UK – specified evidence

If you are working for your own company, that is called a specified company under the rules. There are very specific documents you need to provide. You can also only apply under category G or F

[thisisbox]

Have you read the guide ?? https://assets.publishing.service.gov.u ... .0-ext.pdf

Checkout the section titled: Director or employee of a specified limited company in the UK – specified evidence

If you are working for your own company, that is called a specified company under the rules. There are very specific documents you need to provide. You can also only apply under category G or F

Hi Zimba, yes I've read the guide thanks.

What I'm not clear about is whether the financial requirement is based on PAYE and dividends OR company earnings.

If it's the latter, then it does not mention if it's gross or net profit for limited companies.

[zimba]

It is based on salary and dividends earned as that is YOUR income. How much money the company made is not relevant for obvious reasons however all company-related evidence must also be submitted (UKVI will use the accounting year of your company for earnings calculations)

Appendix FM-SE paragraph 9 of the rules require evidence of YOUR income for both of those sources:

c) Where the person is either listed as a director of the company, or is an employee of the company, or both, and receives a salary from the company, all of the following documents must also be provided:
(i) Payslips and P60 (if issued) covering the same period as the Company Tax Return CT600.
(ii) Personal bank statements covering the same 12-month period as the Company Tax Return CT600 showing that the salary as a director or employee of the company (or both) was paid into an account in the name of the person or in the name of the person and their partner jointly.

(d) Where the person receives dividends from the company, all of the following documents must also be provided:
(i) Dividend vouchers for all dividends declared in favour of the person during or in respect of the period covered by the Company Tax Return CT600 showing the company’s and the person’s details with the person’s net dividend amount.
(ii) Personal bank statement(s) showing that those dividends were paid into an account in the name of the person or in the name of the person and their partner jointly.

https://www.gov.uk/guidance/immigration ... d-evidence

[thisisbox]

It is based on salary and dividends earned as that is YOUR income. How much money the company made is not relevant for obvious reasons however all company-related evidence must also be submitted (UKVI will use the accounting year of your company for earnings calculations)

Appendix FM-SE paragraph 9 of the rules require evidence of YOUR income for both of those sources:

c) Where the person is either listed as a director of the company, or is an employee of the company, or both, and receives a salary from the company, all of the following documents must also be provided:
(i) Payslips and P60 (if issued) covering the same period as the Company Tax Return CT600.
(ii) Personal bank statements covering the same 12-month period as the Company Tax Return CT600 showing that the salary as a director or employee of the company (or both) was paid into an account in the name of the person or in the name of the person and their partner jointly.

(d) Where the person receives dividends from the company, all of the following documents must also be provided:
(i) Dividend vouchers for all dividends declared in favour of the person during or in respect of the period covered by the Company Tax Return CT600 showing the company’s and the person’s details with the person’s net dividend amount.
(ii) Personal bank statement(s) showing that those dividends were paid into an account in the name of the person or in the name of the person and their partner jointly.

https://www.gov.uk/guidance/immigration ... d-evidence

Ok thanks Zimba, yes I've got all the relevant documents.

My company year was from Dec 2019 to Nov 2020 so I will provide all the relevant documents for these dates.

However, I understand I will need to also provide evidence that I'm still earning since then, so I will give personal bank statements/payslips/dividend vouchers up to the most recent month. But will I also need to give business bank statements to coincide with this?

[zimba]

Yes. Corporate/business bank statements covering the same 12-month period as Company Tax Return CT600

[thisisbox]

Yes. Corporate/business bank statements covering the same 12-month period as Company Tax Return CT600

Yes I understand.

But what I meant was - my company financial year runs from Dec 2019 to Nov 2020.

Will I need to give business bank statements BEYOND this date to show that I'm still earning OR will personal bank statements be sufficient?

[zimba]

All the evidence will be based on your accounting period, recent bank statements are not needed

[thisisbox]

All the evidence will be based on your accounting period, recent bank statements are not needed

Thanks Zimba, but in regards to this paragraph:

"evidence of ongoing employment as a director or other employee of the company or of ongoing dividend income from the company. This evidence may include payslips (or dividend vouchers) and personal bank statements showing that, in the period since the latest 12-month period covered by the Company Tax Return CT600, the person’s salary (or dividend income from the company) as a director or employee of the company (or both), was paid into an account in the name of the person or in the name of the person and their partner jointly."

I would need to provide evidence of ongoing employment such as personal bank statements up until the most recent month. Will I also need to give business bank statements to correspond?

[zimba]

I said no.

[thisisbox]

Ok thanks for your help.