Does income from dividends and company expenses count?

[ETICAT]

I'm currently on a Their 1 visa and am due to apply for indefinitely leave to remain next year.

I work as a consultant and am the director and sole employee of my Ltd company.

I receive a minimum salary and larger quarterly dividends (each is issued via my accountant and comes with payslips etc).

I also receive payment for company expenses including mobile phone, travel, entertainments, equipment etc.

Do payments for expenses count towards my total required income for the application, or only salary + dividends?

[sreblog]

I am in the same boat as you, normally expenses that you claim for business mileage , phone bills etc are more considered as reimbursement. But I am not conviced why it cant be considered as earnings, infact someone suggested that this cannot be declared as earnings.

Any more comments from anyone who have already applied tier 1 exntension with expenses also declared as earnings?

[John]

I think it is worthwhile, for a minute or two, just standing back from the Limited Company situation and asking ourselves, what if the business was operated as a sole trader and not by a limited company.

In that situation the profit from the self-employment would be classed as income for tax purposes and indeed for visa purposes, and that profit would be after deduction of relevant business expenses.

So now returning to the query here, the limited company situation, why would the expenses count as income? They are what they are, expenses.

All I would say is, the person is not forced to claimed for those expenses, and if their expenses are reduced, their income will be higher.

[Sushil-ACCA]

I think it is worthwhile, for a minute or two, just standing back from the Limited Company situation and asking ourselves, what if the business was operated as a sole trader and not by a limited company.

In that situation the profit from the self-employment would be classed as income for tax purposes and indeed for visa purposes, and that profit would be after deduction of relevant business expenses.

So now returning to the query here, the limited company situation, why would the expenses count as income? They are what they are, expenses.

All I would say is, the person is not forced to claimed for those expenses, and if their expenses are reduced, their income will be higher.

if accounts r produced without considering resonable expenses reqiored to run a business are incorrect a/c and will be refused by ho

so expenses need to be provided and will reduce profits .

[kamran9558]

Hi Guys,

I have a similar question which I want to ask you guys,
I am a sole director of a limited company i have set my salary on the minimum threshold where I donot have to pay any PAYE tax.
For applying for my tier 1 extension I am planning to submit accountant's letter, personal and business bank statements and payslips/dividend vouchers(signed by my accountant ).
every month i transfer my salary and dividend to my personal account
e.g 600 salary+2400 dividend+ 200 (expenses owed to me by my company)
=3200
but my dividend vouchers and salary slips only show 3000 in total and both my(business and personal) bank statements show 3200 because i have an accountancy software which tells me how much i can withdraw for that particular month and it does all the calculations itself . wouldnt that cause a problem as the amounts in bank statements and payslip / voucher will mismatch?

[John]

Expenses are not income!

Based upon the facts as described by you, your taxable income each month is .... Salary £600 ..... Dividend £2400 .... Tax Credit on Dividend £266.67 ..... Total £3266.67.

I am a sole director of a limited company i have set my salary on the minimum threshold where I donot have to pay any PAYE tax.

Really? Or are you also trying to ensure that no NI is payable by both you and your company? If so you have succeeded as regards yourself, but because you are being paid more than £589 per month, if you maintain the £600 level there will be a small amount of NI payable by your company at the end of the tax year.

The reason for this is that, for the first time, there is a difference this tax year between the Primary Threshold .... £139 pw ... and the Secondary Threshold ... £136 pw.

[kamran9558]

actually i wrote 600 only as an example, my set salary is 589 as suggested by my accountant, my question was wouldnt that cause an issue if the salry slips and dividend vouchers show 3000 and bank accounts show 3200, even if they dont count expenses as income then how should i prove that 3200 transfered to my acount are 3000(mentioned in slips/vouchers) and 200 expenses.

[John]

Not a problem the expenses being reimbursed at the same time, but if that is not explained by other documentation, enclose a letter of explanation.

And don't ignore the tax credit attached to your dividends, as part of your income.

Good to hear that you have been advised to to draw £589 salary per month.

[kamran9558]

that sounds reasonable, ill enclose an explanation letter for expenses. my tax credits would be mentioned in the accountant's explanation letter so i guess it should be fine then. thanks for answering john.

[John]

i take 625 as salary

Any reason why £625, presumably per month?

When does your current visa expire? And how recently did you start using your own limited company?