Gross or net for salaried employment

[amarveda]

Do they consider the gross pay or the net (after taxes) for giving points for application for ILR?

[John]

Gross pay, before deduction of income tax and NI.

[amarveda]

John,
But they have taken the net only in my case and due to this it is less. It is if we apply with partly salaried and partly self employed?
Thanks

[John]

But they have taken the net only in my case .......

Please explain who "they" are. What application was being made?

[amarveda]

They obviously means Home office case worker who worked on my case.
This is the application for ILR where we have to show 45 points for earnings total of 32000

[ScopeD]

John,
But they have taken the net only in my case and due to this it is less. It is if we apply with partly salaried and partly self employed?
Thanks

Just to understand you better, you are saying that you declared income from salaried employment as well as income from self-employment and the caseworker assessed the net amounts only?

Based on the guidelines, if you are in salaried employment, your Gross salary will be taken into account. If you are self-employed and you draw a salary from your business, gross amounts will be taken into account. If you are self-employed, your earnings will be limited to your share of net profits to which you are entitled.

Please read points 94 and 95 (Assessment of Previous Earnings): http://www.ukba.homeoffice.gov.uk/sitec ... idance.pdf

[Amber]

If we show salaried income and income from self employment, then for both only the net income should be considered?
Or can we consider gross for the first and net for the second?

[amarveda]

If we show salaried income and income from self employment, then for both only the net income should be considered?
Or can we consider gross for the first and net for the second?

[John]

We need to be careful here because the terminology can be confusing. But the basic rule is that the amount subject to Income Tax is the amount that UKBA should use.

As regards the an employment or indeed Directorship, it is the gross amount that is subject to tax. Confusingly as regards self-employment income it is the net profit, after deduction of business expenses, that is subject to tax, and accordingly it is that amount that UKBA should use.

The nature of self-employment varies considerably. For example a Contractor might have £35000 receipts from clients, less £5000 business expenses, equals £30000 net profit. Or someone else might operate a corner shop selling groceries etc and have £200000 receipts, less £170000 business expenses, leaves £30000 net profit. Of course in both those cases it is £30000 that will be subject to tax and thus the amount that UKBA will take into account.

[amarveda]

Thanks John,
If we mention that the whole income is a profit, as there was no expense, in a self employed case, will that be viewed with suspicion by the UKBA?

[John]

A self-employment that has no business expenses? Were those the facts? As returned to HMRC?

[amarveda]

Yes. Because all was home based and had no business expenses... One need not deduct personal expenses.
I thought it is entirely voluntary what we include as expenses, isnt it? If we dont include any expense, it is in fact only advantageous to HMRC as the taxable amount is more. I have to do this, which is also a fact. Is that ok and will it be accepted by UKBA ? (earlier PBS based ILR application was rejected as the net profit was shown lesser by about 1440 with expenses like rent which are personal) Pls John and other gurus what are your views?

[John]

If we mention that the whole income is a profit, as there was no expense, in a self employed case, will that be viewed with suspicion by the UKBA?

I think the suspicion will arise from the fact that previously there were business expenses, and now there are not.

[amarveda]

Dear John,
Those expenses were personal expenses and hence I dont want to claim tax relief. I thought claiming an expense is voluntary, isnt it?

[John]

That is right but, correct me if I am wrong, you made an application quoting one amount of business profits. It failed, then you made another application, or are going to, quoting a higher amount of business profits.

You ask if UKBA might be suspicious, and if those are the facts, I think they might be.

[amarveda]

John,
So if they are suspicious, can they deny it?
The accountant has made a mistake and he has given that in writing, that he had wrongfully included personal expenses as business expense. Suspicion does not always mean guilty, isnt it?