Self employment earnings.

anu10 · Post by **anu10** » Thu Jul 26, 2012 12:05 am

Dear all,

"93. .......... The appropriate proportion of the net profit of the business (that is, after tax and outgoings) can therefore be counted as the gross salary of the applicant. We will only consider profits made during the appropriate 12-month earnings period for which the applicant is claiming."

I am bit confused again by reading the above section. Does this mean net profit for self employment is calculated after tax. I was told otherwise. Please advice me on this.

Thanks in advanced.

Post by **Lucapooka** » Thu Jul 26, 2012 9:55 am

Yes, after tax and outgoings with regard to self-employment.

anu10 · Post by **anu10** » Thu Jul 26, 2012 1:43 pm

Lucapooka wrote:Yes, after tax and outgoings with regard to self-employment.

Many thanks for you reply. I am sorry I was not very specific earlier. Which tax should be deducted? Is it income tax on my earnings? I am an IT contractor.

gaurav76.5 · Post by **gaurav76.5** » Thu Jul 26, 2012 2:44 pm

depends on whether you are having a limited company or you are a sole trader

anu10 · Post by **anu10** » Thu Jul 26, 2012 3:03 pm

gaurav76.5 wrote:depends on whether you are having a limited company or you are a sole trader

Thanks Again. I'm a sole trader. Not having a limited company.

gaurav76.5 · Post by **gaurav76.5** » Thu Jul 26, 2012 3:21 pm

in that case it will be income tax on your earning..prepare a profit\loss statement....the net profit becomes your salary and you would need to pay tax on it along with Class 2 NI contribution

anu10 · Post by **anu10** » Thu Jul 26, 2012 3:35 pm

Thanks very much gaurav76.5 for your quick reply. This gives me peace of mind.

scorpio_besal · Post by **scorpio_besal** » Thu Jul 26, 2012 9:45 pm

Could you please tell me, as self employed as SOLE TRADER, at the time of extension, when I declare my earning..

Do I need to show my earning as

1) Gross Income - Any Expenses

or

2) Gross Income - (Any Expenses + Tax + NI )

rpsarangi · Post by **rpsarangi** » Fri Jul 27, 2012 1:52 am

Anu as sole trader . You need to show net profit to HO and pay tax on that to HMRC

anu10 · Post by **anu10** » Tue Jul 31, 2012 7:31 pm

Please bear with me. I am making my self clear again my confusion is not over yet.

I am employed + self employed (a sole trader/contractor). I do not have a ltd company. I use my personal account for my salary and contractor income. I pay class 2 NI.

Experienced gurus please tell me whether I should subtract income tax when calculating my net income from self employment.

Thanks in advance.

scorpio_besal · Post by **scorpio_besal** » Tue Jul 31, 2012 8:32 pm

AS PER UKBA WEBSITE , IT STATES

(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)

anu10 · Post by **anu10** » Wed Aug 01, 2012 12:01 am

scorpio_besal wrote:AS PER UKBA WEBSITE , IT STATES

(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)

Thanks for your reply. However members in an earlier postalmost agree that it's profit after tax. I do not understand why members are so divided in such a fundamental issue. Please seniors shed some light on this.

rpsarangi · Post by **rpsarangi** » Wed Aug 01, 2012 9:35 am

hey anu
I think members have already told that for sole trader the income you will show to HO is the net after you take away the expenditure but before TAX . Its there in the PDF clearly and your accountant knows what to do as he is an expert in this field.
good luck

anu10 · Post by **anu10** » Wed Aug 01, 2012 8:00 pm

rpsarangi wrote:hey anu
I think members have already told that for sole trader the income you will show to HO is the net after you take away the expenditure but before TAX . Its there in the PDF clearly and your accountant knows what to do as he is an expert in this field.
good luck

Many thanks rasangi. I know you have replied about this. But in the forum there are conflicting posts. If you don't mind could you point out the section in policy guidance about sole trader income. Thanks again.

anu

scorpio_besal · Post by **scorpio_besal** » Wed Aug 01, 2012 8:41 pm

http://www.ukba.homeoffice.gov.uk/sitec ... idance.pdf

read page 22

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;
• personal/business bank statements.

.............

Manka10 · Post by **Manka10** » Thu Aug 02, 2012 10:12 am

anu10 wrote:Please bear with me. I am making my self clear again my confusion is not over yet.

I am employed + self employed (a sole trader/contractor). I do not have a ltd company. I use my personal account for my salary and contractor income. I pay class 2 NI.

Experienced gurus please tell me whether I should subtract income tax when calculating my net income from self employment.

Thanks in advance.

point number 92 & 93 in T1 guidance are two different circumstances pertaining to self-employed individuals, you should know what is applicable to you or speak to your accountant.

I applied as a self employed individual back in december 2011 where my earnings from self-employment were small as compared to my full time job & i claimed points on self-employment income including tax

rpsarangi · Post by **rpsarangi** » Thu Aug 02, 2012 10:56 am

If you are working as a Sole trader then you need to show HO the Net income which will be Gross minus the Expenditure and You pay Tax to HMRC on the Net income Later . I think HO is concerned about the Net Income .
(Sole Trader Only)..I am not telling about directors of LImited Company.
Seniors please comment if I am wrong.

anu10 · Post by **anu10** » Fri Aug 03, 2012 12:32 am

Thanks Menka and rpsarangi,

According to my accountant, net profit is calculated as: income-(expences, class 2 NI+income tax + class 4 NI). But he agrees that for home office it could be income - expenses. he is gong to clarify it with HO.

According to policy guidance this is the part applicable for sole trader.

If the applicant is a contractor who does not operate either through his/her own company or as an employee, he/she may provide:
•an accountant’s letter confirming a breakdown of his/her gross and net
earnings for the period claimed; and

Only issue is it does not say how the net is calculated.

Other confusing thing is the this website:

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

This is from Attributes for Tier 1 (Exceptional Talent) Migrants.

Opinion of more senior members with solid experience would be rally helpful to rest this for once and for all.

Many thanks.

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Self employment earnings.

Self employment earnings.