Input for Tier 1 visa extension - Querry for Dividend

[betogether]

Hi Experts,

I am having my Tier 1 visa extension due in coming Nov.

I work as a contractor and will have to consider salary and dividend for my income for last 12 Months.

Before I go in detail of my query I may request a quick input on below point:
Which one is the right option to show my annual income from below 2 options:

1) Total Income = Gross Salary + Gross Dividend (Net Div + Tax)
2) Total Income = Gross Salary + Net Dividend (only net dividend amount)

My accountant is suggesting that option 2 is the right one but I am confuse about it.

Approx Examples:
Total Income 57000 = 11000 (gross salary) + 46000 (42000 - net + 4000 - tax)
Total Income 53000 = 11000 (gross salary) + 42000 (net dividend)
Which is the right calculation?

Would you be so kind by suggesting me for the above query

Thanks and Regards
Betogether

[bestprint]

option 1 is right.

which means we consider gross dividend for calculating our income

[johnyboy]

Your accountant is right. option 2.

Your income is always calculated as gross salary + net dividend.

http://firstmigration.com/visas/uk/tier ... f-employed - Earnings Through a Limited Company

[canon123]

Total Salary to Claim: Gross Salary + Net Dividends + 10% Tax Credit

[canon123]

If the contractor limited company pays a dividend of £9,000, the tax credit is 10% of the gross dividend, or £1,000, and the grossed-up dividend is £10,000. What the contractor actually receives is £9,000, and what goes into the paperwork as taxable income is £10,000

Search the policy guidance and even UK BA calculates earnings as grossed-up dividend with tax credit

[gaurav76.5]

nope canon123 is wrong...and johnyboy is correct...you need to produce dividend voucher which shows gross dividend and net dividend but since there is 10%tax credit on dividend that part is discarded and you are left with net dividned which is paid from your business account to personal account and that becomes your income

[vikasbirla]

nope canon123 is wrong...and johnyboy is correct...you need to produce dividend voucher which shows gross dividend and net dividend but since there is 10%tax credit on dividend that part is discarded and you are left with net dividned which is paid from your business account to personal account and that becomes your income

Option 1 is correct.

Have a look at
http://www.ukba.homeoffice.gov.uk/visas ... documents/

"If you are one of a number of shareholders in the business and are claiming for net profits made over the earnings period, you should provide a letter from your accountant, confirming the percentage share you are entitled to receive from the business's net profit before tax."

The dividend has to be considered before tax.

So Net Dividend 9000 (after deducting tax of 1000)
Gross - 10,000 - will be considered.

[betogether]

Hi Experts,

I really appreciate your response on this post. This will be a big help for me to present my application.

I tries to read through the UKBA link provided by you and seems below are some important sections. By reviewing this might be be we can conclude the same:

1)
[b]"If you are one of a number of shareholders in the business and are claiming for net profits made over the earnings period, you should provide a letter from your accountant, confirming the percentage share you are entitled to receive from the business's net profit before tax"[/b]

2)
[b]If you are not the sole shareholder of the company you should also provide a letter from your accountant confirming your shareholding and the proportion of net profit before tax to which you are entitled for the earnings period claimed[/b]

Please your comments so that we all agree on same option.
As you all know that how critical visa stuff is and there is no 2nd chance iof I make mistake.

Specially in my case where; if I show gross dividend then I cross 55K as annual income and that gives me required points
If I use only net dividend I will be with below 55K annual income and I will not get required points - therefore either I will have to run an additional invoice to one of my friends company OR give directors loan to my company so that I can run additional net dividend .

Please suggest!

Thanks and Regards
Betogether!

[betogether]

Addition to above response:

In below link
http://firstmigration.com/visas/uk/tier ... f-employed

"Please note that the figures considered by the Home Office are the gross salary and net dividend."

Thanks and Regards
Betogether

[vikasbirla]

Addition to above response:

In below link
http://firstmigration.com/visas/uk/tier ... f-employed

"Please note that the figures considered by the Home Office are the gross salary and net dividend."

Thanks and Regards
Betogether

Why are you believing in the above link and not the UKBA one which was posted above.

[vikasbirla]

If I use only net dividend I will be with below 55K annual income and I will not get required points - therefore either I will have to run an additional invoice to one of my friends company OR give directors loan to my company so that I can run additional net dividend .

Dividend has to be taken by company profit, and not by adding money as a loan. Though the first option is ok but I will suggest you to be careful as raising such invoices can have other impacts ( eg VAT)

[betogether]

Hi Again,

Thanks allot Vikas!

Further to this I am also reading T1 Gerneral Guidence and below section (point 93) is again confusing:

93. If an applicant is self-employed and has chosen to retain the profits within the business, his/her earnings are limited to the share of the business’s net profits to which he/she is entitled. 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.


Regarding Additional Invoice or Loaning you suggested the loaning is not an option to increase the dividend so that I will have to raise an additional invoice to be eligible for the Tier 1 visa extension.
Do you see any additional impact apart from VAT?
I mean is this consider as manipulation or something?
Is there any thing legal in this.
In my knowledge if I raise invoice I will have to pay lot of extra money to govt i.e. VAT but is there any impact which is not seen by me?

Thanks and Regards
Betogether!

[vikasbirla]

Regarding Additional Invoice or Loaning you suggested the loaning is not an option to increase the dividend so that I will have to raise an additional invoice to be eligible for the Tier 1 visa extension.
Do you see any additional impact apart from VAT?
I mean is this consider as manipulation or something?
Is there any thing legal in this.
In my knowledge if I raise invoice I will have to pay lot of extra money to govt i.e. VAT but is there any impact which is not seen by me?

I don't see anything else, but I am not an accountant. As you have a limited company, so you must be having an accountant and he must know the details. So better ask him.

[rk_simh]

Hi Again,

Thanks allot Vikas!

Further to this I am also reading T1 Gerneral Guidence and below section (point 93) is again confusing:

93. If an applicant is self-employed and has chosen to retain the profits within the business, his/her earnings are limited to the share of the business’s net profits to which he/she is entitled. 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.


Regarding Additional Invoice or Loaning you suggested the loaning is not an option to increase the dividend so that I will have to raise an additional invoice to be eligible for the Tier 1 visa extension.
Do you see any additional impact apart from VAT?
I mean is this consider as manipulation or something?
Is there any thing legal in this.
In my knowledge if I raise invoice I will have to pay lot of extra money to govt i.e. VAT but is there any impact which is not seen by me?

Thanks and Regards
Betogether!

****************************
Same Issue:

1. Employment type: Employed + Self Employed (Gross Dividend)
2. No of Applicants: 1
3. Current vignette: Tier 1 General
4. Date of PEO Appointment: 11 September 2012
5. Appointment was at 8:45 am ( but was little late to appointment, i went @ 9:30am permission granted upon request)
6. Payment mode: Credit Card
7. Date of expiry of current leave (visa): 20 Sep 2012
8. Date of expiry of the new visa: 20 Sep 2014
9. Approval letter given: Yes
10. Name of PEO Applied: Croydon
11. BRP received on: still awaiting

Decision taken in 90minutes, very fast and quick service.

Thank you very much to this forum and Thank you one and all the active members, viewers and answer back people.

i am totally an active Viewer.

[betogether]

Hi RK,

First of all congratulations!

If you had same issue what figures you used. Did you use gross or net dividend for point calculation?

Hi All, I really appreciate your responses before but topic is still not concluded for me. Point 93 is confusing me from guidelines.

Should I use gross dividend (Net + 10/9) or only Net?

Please help.

Thanks and Regards
Betogether!

[rk_simh]

Hi RK,

First of all congratulations!

If you had same issue what figures you used. Did you use gross or net dividend for point calculation?

Hi All, I really appreciate your responses before but topic is still not concluded for me. Point 93 is confusing me from guidelines.

Should I use gross dividend (Net + 10/9) or only Net?

Please help.

Thanks and Regards
Betogether!

Thank you for the wishes Betogether.
i accounted NET+10/9.

[beghelli]

I used gross dividend and approved last week.

[tier1-immigrant]

The 10% tax on dividend is also counted in your earnings.

So your total earnings = gross salary + net dividend + tax credit on dividend.

I got my extension approved based on this calculation only.

If UKBA do not consider the tax credit, my extension would have been rejected.

Surprise to see different views from senior memembers.

[betogether]

Thanks all for your valuable comments.
I think I will cross my fingers and conclude that I can use gross dividend to claim my points.

If anyone have any additional comments please update!

Any center/location preference for booking appointment?

Thanks and Regards
Betogether

[chary]

Thanks for sharing your experiences guys.

Mine also similar to yours.

They considered gross dividends. (As per the UKBA guidelines, gross earnings is considered).

[sns0413]

Hello Friend,
I have same concern like yours if you don't mind can you share your experience and what did you finally submitted?
Looking forward to hear from you.
Regards
S.

[quote="betogether"]Thanks all for your valuable comments.
I think I will cross my fingers and conclude that I can use gross dividend to claim my points.

If anyone have any additional comments please update!

Any center/location preference for booking appointment?

Thanks and Regards
Betogether[/quote]

[Yash001]

The 10% tax on dividend is also counted in your earnings.

So your total earnings = gross salary + net dividend + tax credit on dividend.

I got my extension approved based on this calculation only.

If UKBA do not consider the tax credit, my extension would have been rejected.

Surprise to see different views from senior memembers.

I support the above statements as even I got my visa extension based on the same ...it's gross salary+gross dividend

[sns0413]

Thank you for prompt reply,

I actually don't withdraw full salary out from my business accounts but when I file tax returns and even my CA letter shows that I have salary of 7200 so can I claim full salary as gross salary or only the amount I have withdrawn from the business?

Total Salary 7200 & Withdrawn salary 3600

So in my case I have total withdrawn from company account is of 28k to my personal account out of which 3600 is salary and 24400 is dividend so total is 3600+24400+2440=30440.

or option 2 :

7200 + 24400 + 2440 = 34040

Once again many thanks in advance.

Regards
S.

[quote="Yash001"][quote="tier1-immigrant"]The 10% tax on dividend is also counted in your earnings.

So your total earnings = gross salary + net dividend + tax credit on dividend.

I got my extension approved based on this calculation only.

If UKBA do not consider the tax credit, my extension would have been rejected.

Surprise to see different views from senior memembers.[/quote]

I support the above statements as even I got my visa extension based on the same ...it's gross salary+gross dividend[/quote]

[Yash001]

Hope you do understand gross salary...

If we withdrew only 3600 from company account as salary then was the remaining 3600 related to tax you paid HMRC or something? Ask your accountant to explain... I believe you are going to submit salary slips as one form of evidence and your salary slip ahould show 7200 gross salary withdrawn over a period which you are considering for your application...

[sns0413]

Yes we have files 7200 as salary in HMRC as my Self assessment.
But as suggested I will double check with my CA and get back to you.
--
[quote="Yash001"]Hope you do understand gross salary...

If we withdrew only 3600 from company account as salary then was the remaining 3600 related to tax you paid HMRC or something? Ask your accountant to explain... I believe you are going to submit salary slips as one form of evidence and your salary slip ahould show 7200 gross salary withdrawn over a period which you are considering for your application...[/quote]