TIER 1 GENERAL EARNINGS FOR COMPANY DIRECTOR

[sisieko]

My Tier 1 General Visa expires in April 2013.
I am a company director of a limited company.
I am required to show my earning for the last 12 months but I believe I have made a serious mistake re my earnings.
For the year 2012/2013 my company has been trading from April but I only drew a salary three times between June, July and August in 2012. I stopped drawing a salary as I got a full time job in September and have been PAYE since then.
Here in lies my problem, between April and August I did not draw any dividends asides the salary I paid myself in the months of June, July and August. I thought I did not have to draw dividends as I could use the company profits as my earnings since I am a director.
I have recently been reading all the postings here on Immigrationboards and all company directors seem to have also drawn dividends.
The salary I drew only covers a fraction of my earnings as I thought I could also use my profits as my income thereby meeting my earnings requirements.

Can I just show my company profits as income or must I draw dividends as well?
Please advise.

[tier1_aspirant_del]

I think you can net profits as well but the documentation will increase. Go through the Tier1 guidance doc.

Just a suggestion - why don't you withdraw dividends now? Your extension is in April and you can then show these dividends as your earning.

Disclaimer - I'm just suggesting it as an option. Please do it only after verifying with seniors.

[tier1_aspirant_del]

I think you can show net profits as well but the documentation will increase. Go through the Tier1 guidance doc.

Just a suggestion - why don't you withdraw dividends now? Your extension is in April and you can then show these dividends as your earning.

Disclaimer - I'm just suggesting it as an option. Please do it only after verifying with seniors.

[honey_parmar]

Hi sisieko,

You have to transfer the dividend to your personal account to claim it as your earnings but make sure that divided amount is there in your business account after taking care of Corporation tax.
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Article on DividendsHow much can be taken in dividends
A dividend is the distribution of 'after tax profits' so it is essential that the company has made a profit and has made sufficient provision to cover its corporation tax bill.

If this rule is not followed then the dividend could be viewed as an unlawful distribution of the company's funds.

When the dividend is paid by the company to its shareholders it is given an associated tax credit of 10% - see below to see how this is calculated.

This tax credit is a notional amount only. Nothing is due to HMRC and no further tax needs to be paid on this dividend unless you are a higher rate tax payer - see below.

It is essential that whenever your company pays a dividend to you as a shareholder, it must be formally declared at a director's meeting.

HMRC can ask for proof of the declaration of dividends and it is recommended that these documents are keep up to date.

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Also in case u want to show company profits as your earning then please go thru the guidance note thoroughly.

Hope this helps