Query regarding extension 50K and 2 jobs possible?

[vc555]

Hi All,

Query regarding extension.

If i'm just providing contracting services to other company(i.e.. i'm working for my business and providing contract services as developer).

1) In that case what to show as investment if that business is small how can we show 50k injection ?

(setting up business doesn't take 50K) also we cannot show rented property as expenses, so what kind of investment we have to show (even though if we buy some furniture /computes all are less than 10K).

Even though we provide 2 jobs, that salary doesn't count, as in policy guidance it mentioned as separate 2 conditions.

> 50K dispose
> 2 uK citizens jobs


2) As a director, i do need to run salary every month, some times my contract may ends and if i have a gap in my business to get another contract(lets say 3 months),

Still i have to run my payroll and pay taxes ?

Thank you..

[Lucapooka]

All you need to do is credit the company bank account with the capital; you don't have to spend it on anything! Obviously that money will be the company's rather than yours, so rehabilitating it to you will require relevant tax procedures.

I think a lot of PSW migrants are clamouring to switch to Tier 1 (Ent) without really knowing the requirements or if they will meet the requirements to extend. I fear that many won't achieve this and there will be many refusals based on the non-fulfilment of the employment requirement. Three years from now, when these people are forced to leave the UK, there will be a lot of small UK enterprises being wound up and this may give statisticians the false impression that it's due to poor economic performance of the UK economy in general rather than the
liquidation of a bunch of entities that were ill or hastily-conceived just so migrants might continue their residence in the UK rather than because the venture had the merit to succeed. So, good luck!

[rahulsingh1]

Hi Lucapooka,
I have to disagree with you. I have checked with the UKBA.(Although some UKBA call center operators are not sure of what they are saying.)

You have to spend the money in the UK.

And you cannot spend it on residential property.(it is stated explicitly in the guidance too).

Please let me know if you disagree and why. It will help clear out the doubts of many people in the forum.

[rahulsingh1]

Also- one method to invest the money in the company bank account, so that you can take it out without paying any tax is to give your company a loan from yourself.(you being the director).

So essentialy, you as a director will give a loan to your own company and your company will repay that to you. The UKBA will want to see the terms of the director's loan contract (any accountant can make it for you, its not rocket science.)

About creating Jobs, that you have to sort out yourself. But I suggest speak to your european contractor colleagues/friends as to if anyone is ready to be on your payroll, but you have to bear their extra tax burden.

[Lucapooka]

Investing the money in a UK company is investing money in the UK. The money will no longer be in the hands of the source; it will have become a current asset of the UK entity. It is not a loan that has to be serviced. That's what's called an investment. The company can hold onto its assets in the bank or disburse this as expenditure on its operations; business operational decisions that have nothing to do with the requirements of the actual visa or its extension. If the 50K (or 200K) is still showing as a current asset on the company balance sheets at the time of extension, rather than under expenditure, that won't matter.

[vc555]

If the 50K (or 200K) is still showing as a current asset on the company balance sheets at the time of extension, rather than under expenditure, that won't matter.

Hi Lucapooka,

is the above line means to say that, if i show 50K on the time of extension in my company's bank account, so that i achieve that condition ?

sorry Lucapooka, i want to say one thing,

PSW -> as we spend thousands of Money for our studies and completed Masters by the time of doing a proper job (we don't have a proper Visa to settle or even to get jobs)

Also visa is main issue for some one who r trying jobs > agencies keep on asking visa type? and how long ? Most of the companies are not willing to sponsor at the moment.(may be few)

Think.. we build carrier here in uk and by the time of proper job and settlement in life they are asking us to leave !!!! its not good (i'm talking about who r doing proper it Permanent jobs)

It is hard to start carrier in native countries from scratch, so people get depressed. as u say with out knowledge people blindly applying Ent visa as of now its the only choice they can see.

This forum really show's light/life for some people who had questions. I really appreciate this Forum and especially Lucapooka (as you solved many peoples answers) Thank a lot...

Solution for PSW's who are decided to do contracting jobs, weather this visa is suitable or not ? can we achieve Extension or not? that's is main query !!!

If so how? ..

sorry if i'am wrong at my opinion !

[rahulsingh1]

Hi Lucapooka, I appreciate you reply.

But can you please explain, as to why then, does the T1 Ent Guidance, explicitly state, that the money(after being infused into the company) cannot be disbursed by the company on purchasing residential property , if they were not concerned about whether the money is being finally spent or not.

I think it is because, they expect you to show that the money is being actually spent in the UK economy by your company.

But please let us know a different point of view as a lot of people are seeking answers for the same question.

Thanks,

[vc555]

Hi Lucapooka, I appreciate you reply.

But can you please explain, as to why then, does the T1 Ent Guidance, explicitly state, that the money(after being infused into the company) cannot be disbursed by the company on purchasing residential property , if they were not concerned about whether the money is being finally spent or not.

I think it is because, they expect you to show that the money is being actually spent in the UK economy by your company.

But please let us know a different point of view as a lot of people are seeking answers for the same question.

Thanks,

Hi rahulsingh,

I also heard from one of my friend who had applied Ent visa (He told as we r running business and hiring 2 people, that means we r making profit from them by investing money on them)

In above case he said "as per general thing we r investing money in terms of their salary and also we can show some expenses".

Not sure how correct he is .. !!

[whiteroses]

The company is a separate legal entity, and is based in the UK. Any money invested in the company will thus be an investment (for the purpose of the visa).
Of course, if you're investing in property, the part of the property that is used as living accommodation won't count, as that part is not used for business purposes.

[rahulsingh1]

Hi VC555, yes. I am not sure he is correct.
As the salary you pay is an expense for your company and hence is an investment. Any expense your company makes is an investment as per my accountant.

Hi Whiteroses, I understand what you are saying.
But again I repeat my question for you and Lucapooka. If for the purposes of renewing the visa, 200k(or 50K for graduate ent visa) just needs to be put into the company's bank account.
Why is it that the UKBA guidance states that the company cannot spend the money on residential property ? If they were not concerned about the company spending the money(after putting it in the company bank account) they would have never put this rule in or bothered about it.

This is what still remains a question.

Look forward to Lucapooka and your views on the same.

Thanks,

[sriks]

one of the clause for extension is to hire 2 full time workers for 1 year..

so thats 30 hours x 52 weeks x 2 people ..

if you pay around the national baseline average it in itself is around 20K..

However, i believe if you can find some of your friends who can contract under your company.. their salary will be counted(it will be normally be considerably high if they are contracting) .. so you will have no problem spending the 50k

[rehan01]

Hi VC555, yes. I am not sure he is correct.
As the salary you pay is an expense for your company and hence is an investment. Any expense your company makes is an investment as per my accountant.

Hi Whiteroses, I understand what you are saying.
But again I repeat my question for you and Lucapooka. If for the purposes of renewing the visa, 200k(or 50K for graduate ent visa) just needs to be put into the company's bank account.
Why is it that the UKBA guidance states that the company cannot spend the money on residential property ? If they were not concerned about the company spending the money(after putting it in the company bank account) they would have never put this rule in or bothered about it.

This is what still remains a question.

Look forward to Lucapooka and your views on the same.

Thanks,

Hi Rahulsingh1,

I understand your concern and regarding the question you keep asking about not allowed to spend on residential property etc ..... I believe in clearly mention in policy guidance that if you spend money on residential property than it will count toward your investment to your business because residential property is not something you will be using it for your business so you cannot claim points for it or even if you invest in commercial property and it got 2 bedroom flat they will consider this as residential too.

Also realistically talking if they let people invest on residential property etc than most of us will show 50k invest as deposit of buying a house and selling it later (easy way to show investment)

Also I am not too sure about the Lucapooka reply logically it make sense... but I doubt it UKBA will consider this as investment into business if I transfer 50k or 200k into company bank account.

but if that is the case than I will be the first one to do this, As it will give me more time to spend.

and as long as I can prove 30hrs x 52 Weeks for (2 Employee and 50k in company bank account or 30 k invested and 20k in company bank account )
that mean job is done ?

please share your views

regards

[Lucapooka]

Clearly there is a lack of understanding about how business accounting finance works. If you invest 50K or 200K into your own business you can't simply recover that money as it's gone to the business and is no longer in your private possession. If you wanted the money back, you would have to pay it to yourself as income and pay tax on that sum, or wind up the company and pay tax on the same. Once the money is with the company that is the investment as far as the UKBA are concerned and your company can spend this capital sum on paper clips, or on whatever type of expenditure your business requires, or simply leave it as a current cash asset . There is no requirement to dispose of the money as business expenditure after it has been invested.

So, by investing 200K in a UK business, you are not necessarily giving 200K to the UK exchequer, you are giving the taxable fringes that are imposed on that sum as it is moved around the economy.

[buntyz]

As per my knowledge salaries of two staff members cannot be counted as investment coz it is runnning cost not d investment in buss.m nt sure bt i thinnk so..
coz wen u apply for extension dey will check investment not running cost of bussiness.

[Lucapooka]

Are you actually reading this thread; your prose suggests you might find it a struggle? Once the money is in the company that constitutes the investment. Hopefully, that resolves your understanding.

Having invested the money in the business, it can be retained or disbursed and that is of no consequence to the UKBA. It's none of their concern and is not a requirement to maintain your immigration status

If it is disbursed it can be spent on any operating costs including salaries. Salaries are an operating cost that can be paid from the current cash assets or the operating revenue. They can even be paid from the operating revenue of the business without the need to use the current cash assets. It's perfectly possible to invest 200K into a UK business and never need to use that money on actual expenditure for the business because the operating revenue of the entity is sufficient to meet the expenditure needs .

Under the Tier 1 (Ent) 200K threshold conditions it's also perfectly possible to have a business where no actual capital investment was made, and this could be due to the to fact that the initial capital sum shown to acquire the visa was never seeded into a company which, after 3 years, has been sufficiently successful to complete the requirements (5 million income and 10 employees) that qualify the Tier 1 migrant for early ILR. The fact that the capital investment is a requirement for the visa extension rather than for ILR makes this situation possible. In this case no extension was necessary so no capital investment was necessary.

[rehan01]

Are you actually reading this thread; your prose suggests you might find it a struggle? Once the money is in the company that constitutes the investment. Hopefully, that resolves your understanding.

Having invested the money in the business, it can be retained or disbursed and that is of no consequence to the UKBA. It's none of their concern and is not a requirement to maintain your immigration status

If it is disbursed it can be spent on any operating costs including salaries. Salaries are an operating cost that can be paid from the current cash assets or the operating revenue. They can even be paid from the operating revenue of the business without the need to use the current cash assets. It's perfectly possible to invest 200K into a UK business and never need to use that money on actual expenditure for the business because the operating revenue of the entity is sufficient to meet the expenditure needs .

Under the Tier 1 (Ent) 200K threshold conditions it's also perfectly possible to have a business where no actual capital investment was made, and this could be due to the to fact that the initial capital sum shown to acquire the visa was never seeded into a company which, after 3 years, has been sufficiently successful to complete the requirements (5 million income and 10 employees) that qualify the Tier 1 migrant for early ILR. The fact that the capital investment is a requirement for the visa extension rather than for ILR makes this situation possible. In this case no extension was necessary so no capital investment was necessary.

Lucapooka thank you very much for your details explanation, HIGHLY APPRECIATED.

It make my life so easy as I will transfer funds to my business account once I got Tier 1 visa and will be keep using and investing towards by business and salaries for employees etc.

Also at the time of extension whatever I have invested I will show that and the remaining balance will be in my company bank account so that way I will meet all the requirements for investment too.

once again thanks for your help Lucapooka.

regards

[buntyz]

i meant wat if v trading as sole trader how cn u count salaries as investment then.

Are you actually reading this thread; your prose suggests you might find it a struggle? Once the money is in the company that constitutes the investment. Hopefully, that resolves your understanding.

Having invested the money in the business, it can be retained or disbursed and that is of no consequence to the UKBA. It's none of their concern and is not a requirement to maintain your immigration status

If it is disbursed it can be spent on any operating costs including salaries. Salaries are an operating cost that can be paid from the current cash assets or the operating revenue. They can even be paid from the operating revenue of the business without the need to use the current cash assets. It's perfectly possible to invest 200K into a UK business and never need to use that money on actual expenditure for the business because the operating revenue of the entity is sufficient to meet the expenditure needs .

Under the Tier 1 (Ent) 200K threshold conditions it's also perfectly possible to have a business where no actual capital investment was made, and this could be due to the to fact that the initial capital sum shown to acquire the visa was never seeded into a company which, after 3 years, has been sufficiently successful to complete the requirements (5 million income and 10 employees) that qualify the Tier 1 migrant for early ILR. The fact that the capital investment is a requirement for the visa extension rather than for ILR makes this situation possible. In this case no extension was necessary so no capital investment was necessary.

[Lucapooka]

The investment is the injection of funds into the business which, in turn, has to be treated as a current asset in your accounts package. Use that money at will on business expenditure including salaries.

[rehan01]

The investment is the injection of funds into the business which, in turn, has to be treated as a current asset in your accounts package. Use that money at will on business expenditure including salaries.

Agreed and many thanks for the advise and explanation.

regards

[maverick_76]

The investment is the injection of funds into the business which, in turn, has to be treated as a current asset in your accounts package. Use that money at will on business expenditure including salaries.

However based on latest guidance - "If you already have leave as a Tier 1 (Entrepreneur) we may curtail your leave if the funds you have used to apply cease to be available to you (unless you have spent them in the establishment or running of your business or businesses). ‘Spent’ excludes spending on your own remuneration."

Directors salary can be interpreted as 'spending on your own remuneration'.

[Lucapooka]

Maverick, that was legislation announced yesterday and could not have been forseen during this current discussion. It would not apply to the salaries of employed workers, which is what the thread is discussing.

[maverick_76]

@ Luca - Sorry for going out of context here. Actually had asked same question in a different thread and someone pointed me to this thread.

Quickly, could you let me know your views whether my interpretation of directors salary can not be paid through 200K invested in business is correct?

[tier1tier1tier1]

If I purchased some material from UK which is costing more than GBP100K and I export that material to some other country, then will this be consider as a investment ?

Please advice.

[sm12]

If I purchased some material from UK which is costing more than GBP100K and I export that material to some other country, then will this be consider as a investment ?

Please advice.

Yes.

[rahulsingh1]

Luca - i agree. The salaries was only announced yesterday.

But it says on the top that that it applies to people who are applying from 30th Jan or who have their application undecided yet.

So I would assume that people who got the visa and are already in the country, for them it does not apply, and they can still show their own remuneration as investment.

Any thoughts on this Luca ?