Is self-employed business gross income is the net profit?

[JAH]

Dear Members,

I am going to apply HSMPTier 1 extension. I need to cover 25points in pervious earning i.e. 26000 GBP
My turnover is £35000.
Is £26000 is considered as gross income or net profit by the case worker for awarding me 25 points?
I am self-employed(sole trader) in retail business(not working through a Limited Company).
Is my self-employed gross income is considered as the net profit of the business?

Comment please!

Regards,

Ajmal

[blue.olive]

Dear Members,

I am going to apply HSMPTier 1 extension. I need to cover 25points in pervious earning i.e. 26000 GBP
My turnover is £35000.
Is £26000 is considered as gross income or net profit by the case worker for awarding me 25 points?
I am self-employed(sole trader) in retail business(not working through a Limited Company).
Is my self-employed gross income is considered as the net profit of the business?

Comment please!

Regards,

Ajmal

Your income is Net profit ( Gross profit less expense incurred)
not your gross income.

Income subject to tax is your income, off course you will not pay tax on your gross income, similar principle applies here.

Regards
Olive

[rizwan567]

Gross Income (Total revenue/turnover) - Expenses = Net Profits (considered by caseworker)

[JAH]

Thank you for your reply.

But i am still confused with different reply.

Have a look and let me know your views please.

I have put question at www.still-unclear.co.uk still-unclear Work Permit, Tier 1 HSMP and UK Immigration Services


QUESTION:As i need 25 points which covers at £26,000 to £28,999 Is this figur would be considered as my gross income or net profit to get points.?
REPLY:If you are self-employed (not working through a Limited Company) then your gross income is the net profit of the business. You need this correctly evidenced with support from an accountant and I recommend that you engage professional assistance for this type of application. In the first instance you should request an assessment by visiting the Tier 1 Visa Points Calculator at www.still-unclear.co.uk - complete the assessment and click the button to request an assessment.

Regards,

Dean

Gross Income (Total revenue/turnover) - Expenses = Net Profits (considered by caseworker)

[JAH]

Dear members,

Previous earning document at UKBA website states at page no. 8 like that....let me know your understanding on this as well plz...
you can find this document at
http://www.ukba.homeoffice.gov.uk/sitec ... iew=Binary

Self-employed applicants
Past earnings for self-employed applicants may have been paid in a number of ways. The applicant may pay themselves a salary out of the company funds or they may take the company profits as their earnings. The pay advice to the applicant may show payments to the applicant out of company profits in the form of dividends. The caseworkers should consider the gross dividend paid to the applicant

please comment
Regards,

Ajmal

[rizwan567]

The link you have referred to is outdate by at least more than 2 years.. this is not in use by UKBA anymore but it does clear up a concept a bit however this is not the policy now a days.

[JAH]

The link you have referred to is outdate by at least more than 2 years.. this is not in use by UKBA anymore but it does clear up a concept a bit however this is not the policy now a days.

Rizwan please hve a look...
http://www.mulberryfinch.com/tier-1-gen ... /earnings/

[silverline]

Gross Income (Total revenue/turnover) - Expenses = Net Profits (considered by caseworker)

This net Profit will not automatically become earnings of self employed for the purpose of points claim. They need to be withdrawn by way of salary or dividend. Gross amount of such taxable salary & dividend will be earnings for the purpose of PBS.

Imagine a situation where self-employed decide to reinvest business profits back into business, effectively making them un-taxable. One can not claim "net profit of business" as "gross earnings of self-employed" in this case.

[blue.olive]

Gross Income (Total revenue/turnover) - Expenses = Net Profits (considered by caseworker)

This net Profit will not automatically become earnings of self employed for the purpose of points claim. They need to be withdrawn by way of salary or dividend. Gross amount of such taxable salary & dividend will be earnings for the purpose of PBS.

Imagine a situation where self-employed decide to reinvest business profits back into business, effectively making them un-taxable. One can not claim "net profit of business" as "gross earnings of self-employed" in this case.

if you are self employed your net profit is automatically become your earning, and there is no such things as dividend in self employment, any money you withdraw from business is consider as Drawing unless you are working under the limited company arrangement.

Please do not confuse with taxation rules , simply following the Home office guidance.

self-employed earnings within a business
or company structure:
If an applicant has worked in a selfemployed capacity in his/her own business
or company structure and has chosen to
keep his/her earnings within the business or
company, he/she could provide:
• business or company accounts that meet
statutory requirements and show the
net profit made for the earnings period
claimed; and
• personal/business bank statements.

[JAH]

Gross Income (Total revenue/turnover) - Expenses = Net Profits (considered by caseworker)

This net Profit will not automatically become earnings of self employed for the purpose of points claim. They need to be withdrawn by way of salary or dividend. Gross amount of such taxable salary & dividend will be earnings for the purpose of PBS.

Imagine a situation where self-employed decide to reinvest business profits back into business, effectively making them un-taxable. One can not claim "net profit of business" as "gross earnings of self-employed" in this case.

if you are self employed your net profit is automatically become your earning, and there is no such things as dividend in self employment, any money you withdraw from business is consider as Drawing unless you are working under the limited company arrangement.

Please do not confuse with taxation rules , simply following the Home office guidance.

self-employed earnings within a business
or company structure:
If an applicant has worked in a selfemployed capacity in his/her own business
or company structure and has chosen to
keep his/her earnings within the business or
company, he/she could provide:
• business or company accounts that meet
statutory requirements and show the
net profit made for the earnings period
claimed; and
• personal/business bank statements.

Infact i am much confused

[mulderpf]

For self-employment, net profit before tax is used.

15. Where the earnings are the profits of a business derived through self-employment or other business activities, the earnings that will be assessed are the profits of the business before tax. Where the applicant only has a share of the business, the earnings that will be assessed are the profits of the business before tax to which the applicant is entitled.

The guidance just says profit and I said net profit above. The reason I draw that inference is that gross profit cannot ever be after tax, only net profit can be classified as before or after tax.

You don't have to claim drawings or salary and you can opt for just using the net profit instead. If you claim drawings or salary, then you can claim that too, but the net result will be the same and should not disadvantage you.

[rizwan567]

The link you have referred to is outdate by at least more than 2 years.. this is not in use by UKBA anymore but it does clear up a concept a bit however this is not the policy now a days.

Rizwan please hve a look...
http://www.mulberryfinch.com/tier-1-gen ... /earnings/

Yes, I have had look of above link. So what next?

[JAH]

The link you have referred to is outdate by at least more than 2 years.. this is not in use by UKBA anymore but it does clear up a concept a bit however this is not the policy now a days.

Rizwan please hve a look...
http://www.mulberryfinch.com/tier-1-gen ... /earnings/

Yes, I have had look of above link. So what next?

they r saying abt gross income to claim points.....so its wrong then???

[mulderpf]

The link you have referred to is outdate by at least more than 2 years.. this is not in use by UKBA anymore but it does clear up a concept a bit however this is not the policy now a days.

Rizwan please hve a look...
http://www.mulberryfinch.com/tier-1-gen ... /earnings/

Yes, I have had look of above link. So what next?

they r saying abt gross income to claim points.....so its wrong then???

Theink does not talk about gross income, just gross amount - eg net income before tax and N.I.

[blackthunder]

its simple..
case1: if u are self employed u will be awarded points for
net profit(gross income-tax+expenses etc)
case2: for limited company u will be awared points for salary or gross dividend..
gross dividend= net dividend+tax credits
you may ask why they are considering gross dividend for limited company structure?
well , dividends can be paid in any company when there is a profit and after all expenses like tax etc...
i hope this helps..

[digitalrev]

it seems pretty complicated now I am worried as well.

I am self employed . my total turn over is 62 K and i have expenses nearly 5k . so my gross income would be 57k am i right ?

am i going to get points for that 57k income?

or i have to show my net income after tax dedication, which is 14K i guess ??

has anyone applied as a self employed? any successful applicant ?

please tell us more.

[[iD]]

it seems pretty complicated now I am worried as well.

I am self employed . my total turn over is 62 K and i have expenses nearly 5k . so my gross income would be 57k am i right ?

am i going to get points for that 57k income?

or i have to show my net income after tax dedication, which is 14K i guess ??

has anyone applied as a self employed? any successful applicant ?

please tell us more.

It's your earnings after expenses but before tax.
So Turnover-Expenses=whatever left. In your case it's 57K. I've applied as self employed and used the same formula