Point 93

[drkooper]

Clarification regarding Point 93 :

If an applicant is self-employed and has chosen to retain the profi ts within the business, his/her earnings are limited to the share of the business’s net profi ts to which he/she is entitled. The appropriate proportion of the net profi t of the business (that is, after tax and outgoings) can therefore be counted as the gross salary of the applicant. We will only consider profi ts made during the appropriate 12-month earnings period for which the applicant is claiming.

Just to clarify, if a person is self-employed is his earnings are counted as before paying tax or after paying tax?

Thanks
A

[ddb]

After paying tax.

[drkooper]

After paying tax.

What happens if the current financial year is still going on and you have not paid the tax ( i mean in no way you can file your tax return half way through the financial year). In that scenario, is it earnings before tax or after tax for self employed person?

[ddb]

I believe that's where Paragraph 114, point (iv) on page 20 of the policy guidance, comes into play. The guidance also advises one to be cautious if/when using tax documents. At the end of the day, they'll only assess net earnings (after tax deductions).

[drkooper]

What happens if the current financial year is still going on and you have not paid the tax ( i mean in no way you can file your tax return half way through the financial year). In that scenario, is it earnings before tax or after tax for self employed person?

I believe that's where Paragraph 114, point (iv) on page 20 of the policy guidance, comes into play. The guidance also advises one to be cautious if/when using tax documents. At the end of the day, they'll only assess net earnings (after tax deductions).

Thanks for your information. However, I personally know 3 peope who had shown the earnings before tax and had got visa. So did, HO overlooked the earnings or do they count before tax. Sorry, it just got me more confused.

Thanks anyways for your help.

[ddb]

I think those 3 people attached their previous tax documents or tax documents that showed/suggested what they would pay during the tax year/in the next tax year, so maybe based on that, UKBA were able to assess what their net earnings were/would be up to before the date of their application.

See below from the policy guidance;

• a document produced by a tax authority
that shows details of declarable taxable
income on which tax has been paid or will
be paid in a tax year (for example a tax
refund letter or tax demand)

[drkooper]

I think those 3 people attached their previous tax documents or tax documents that showed/suggested what they would pay during the tax year/in the next tax year, so maybe based on that, UKBA were able to assess what their net earnings were/would be up to before the date of their application.

See below from the policy guidance;

• a document produced by a tax authority
that shows details of declarable taxable
income on which tax has been paid or will
be paid in a tax year (for example a tax
refund letter or tax demand)

Thank you DDB for your help.

[CG360]

Sorry to interrupt.
But I believe if you are in the UK ... should be before TAX including self-employed.

As I have found the following note ...at the UKBA website.

[quote]Assessment of previous earnings
We assess your gross salary before tax. This also applies if you are self-employed and draw a salary from your business.

If you earned the money in a country with no tax system, we will consider your total earnings for the period. If you are self-employed, your earnings are assessed on the profits of your business before tax. If you have a share of a business, your earnings are assessed on your share of the business's net profits before tax.[/quote]

Please correct me if I was wrong.

[ddb]

Your correct but this would apply only if drkooper draws a salary from the business. It is my understanding that any gross profit made in a business is taxed. The net profit (after tax) is then paid out (as salary) to the people (employer/employees) involved in the business - to them, this would be their gross earnings. Whatever each person is paid (gross earnings) has to be taxed (either by PAYE or self assessment, NI tax included if applicable).

Sorry to interrupt.
But I believe if you are in the UK ... should be before TAX including self-employed.

As I have found the following note ...at the UKBA website.

Assessment of previous earnings
We assess your gross salary before tax. This also applies if you are self-employed and draw a salary from your business.

[CG360]

Thanks for the clarification.
It does makes sense... I see that's why gross for Employee, however net for self-employed (without owing the company drawing salary from it)... unless earning less than 6K before the tax period.