Self employment - Ltd Company Director

gurrano2 · Post by **gurrano2** » Fri Mar 15, 2013 1:10 pm

Gurus/Seniors,

Please is it true that I need to have registered myself with HMRC as self employed before my earnings can be considered by Home Office? I am about sending my application and someone told me i need to send proof of NI and proof of registration with HMRC for the money earned during the period I am claiming. I am so confused now. Please help....I am a Ltd Company Director with 100% shares and have only paid myself dividend and no paye salary.

Please kindly advice.

rdamsel · Post by **rdamsel** » Fri Mar 15, 2013 1:13 pm

You need to pay NI and case worker will ask proof of that.

You must have prepare your documents from an accountant didn't he he/she told you all this?

Are you fully self employed or employed too?

bubin123 · Post by **bubin123** » Fri Mar 15, 2013 1:22 pm

Since you are showing whole income from dividend, NI contribution is not required. So many people similar to your scenario got there visa approved by showing no salary or a salary below tax & NI threshold.

gurrano2 · Post by **gurrano2** » Fri Mar 15, 2013 1:26 pm

God bless you Bubin....
I pray it is as you have said as I dont know what to do now. Some people said I should have registered myself as Self employed with HMRC but I told them that I am not a Sole Trader but a Ltd Company Director.

Please educate me if I am wrong as I intend to submit my application this month end. Thanks

bubin123 · Post by **bubin123** » Fri Mar 15, 2013 1:41 pm

You are not self employed (as per HMRC)... You are an employee of your own limited company and you are exempted to pay minimum wage to yourself.
I also have ltd company though I pay small amount of NI & PAYE tax to keep HMRC happy ...

gurrano2 · Post by **gurrano2** » Fri Mar 15, 2013 2:11 pm

If HMRC sees my as employed....what is the perception of Home Office? Am I viewed as Employed or Self employed?

bubin123 · Post by **bubin123** » Fri Mar 15, 2013 2:34 pm

Employed...
Though you need to submit few additional document to prove earning from dividends.. Like Accountant letter, dividend voucher etc...

canon123 · Post by **canon123** » Fri Mar 15, 2013 2:47 pm

Take the PAYE Registration letter you got from HMRC.

Get a letter from your accountant that you are PAYE and VAT registered.

Your accountant might have filed a SA for your earnings. Take that as well with you

gurrano2 · Post by **gurrano2** » Fri Mar 15, 2013 2:49 pm

Yes planning to submit the below. Please let me know if there is anything I am missing. Thanks

1. Client contract
2. Business bank account statement
3. Personal bank account statement
4. Company account (with profit/loss)
5. Invoices (should match with business bank statements)
6. company certificate of Incorporation

bubin123 · Post by **bubin123** » Fri Mar 15, 2013 4:07 pm

dividend voucher showing gross,net and tax credit
accountant letter confirming the income during the specified period...
Template letters available on the sticky notes of this forum...

gurrano2 · Post by **gurrano2** » Fri Mar 15, 2013 4:13 pm

Yes thanks bubin for the update. I have already included them for the accountant to prepare. Are they going to check balance in my business account? As it is just 9 months dividend I am claiming and not yet time for my corp tax for 12 months. With these documents, are you sure I will be ok? . Thanks

bubin123 · Post by **bubin123** » Fri Mar 15, 2013 4:21 pm

Thats fine...

gurrano2 · Post by **gurrano2** » Fri Mar 15, 2013 4:51 pm

THanks Bubin....you have been of great help

b52 · Post by **b52** » Sat Mar 16, 2013 4:48 pm

I have income from my limited company. I am only director. I retain my profit within business by buying more stocks. Will my income be considered before tax or after deducting corporation tax . I met two accountants and both have different views . One account says that if I am sole trader then income before tax will be considered. If I am director of ltd company then income after tax will be considered for scoring points . Please advise.

tier1_aspirant_del · Post by **tier1_aspirant_del** » Sun Mar 17, 2013 9:44 am

b52 - Because you are operating as limited company so it should be net profits (after paying corp tax, vat etc).

karg_g · Post by **karg_g** » Sun Mar 17, 2013 10:28 am

Hi,

gurrano2: You are employed in HRMC point of view. Recently UKBA has removed the question where it asks whether you are employed/self employed etc.,

Also since you are director (i.e) employed you should not register has self employed with HRMC.

What is a company director liable for?
For NI purposes, a company director is classified as an
office holder.
Under Section 2(1) of the Social Security Contributions
and Benefits Act 1992, (In Northern Ireland,
Section 2(1) of the Social Security Contributions and
Benefits (Northern Ireland) Act 1992) an office holder
is liable for Class 1 NICs provided the earnings received
from that office are chargeable to Income Tax as
employment income.

Please go to Page 5, Section 4: http://www.hmrc.gov.uk/nitables/ca44.pdf

@bs52: Please dont hijack somebody's question. If you are limited company director your salary + Dividend will be considered. Both the accountants are correct in their judgement. For "Legal" dividends to be declared you need to ensure you have offset 20% corporation tax + 10% Dividend tax (which u can claim as Net dividend)

gurrano2 · Post by **gurrano2** » Sun Mar 17, 2013 12:08 pm

Thanks Karg_g. What if my corporation tax is removed from the remaining 3 months earning I am still expecting to be paid into my business account. My 9 months earning is enough to process my renewal. My company year end is still at end of may. O plan not to take any more dividend to handle the corporation tax. I have about a thousand as current balance and subsequent payment will be used as corporation tax. Is this ok?

karg_g · Post by **karg_g** » Sun Mar 17, 2013 6:22 pm

Hi

From HRMC view this is invalid dividend however UKBA can't dispute this i. e your dividend earnings. What if the reminder of ur payments or contracts gets cancelled then u wud not have made enough profits to declare the dividends.

Long story short ur OK but not a good practice. Always declare legal dividends only after accounting for account corp tax, VAT, NIC, Dividend tax etc.,

karg_g · Post by **karg_g** » Sun Mar 17, 2013 11:28 pm

Posting so others can also get benefitted as well.

Lets assume you made £6000 in month of April 2013.

Expected expense =£1000
Salary =£1000
Net Profit = £4000 (6000-1000-1000)

Amount available for dividend = £4000.
Corporation tax @ 20% = £800.
New amount available for dividend = £3200 (£4000- £800)
Dividend tax credits 10% = £320
Net dividend now available = £2880 (£3200-£320)

Note: These numbers change once u hit higher threshold (£8105). You will also pay more once u hit more 42k in salary & dividend.

Accountants usually should tell u about this. Also I believe UKBA does not people who are trained accountants so I am pretty sure CW will not even worry about this. I extended my tier1 last month and didn't give a single business bank statement (I had/have twice of what's corporation tax due).

Think this way ur a director so ur separate from ur company, so all they care is if salary and dividends can be verified by bank statements and accountant letter. In fact its ur accountant who should be worried.

Good luck

Inbox :: MessageFrom:gurrano2To:karg_gPosted:Sun Mar 17, 2013 9:31 pmSubject:Dividend Payment
Thanks for your mail. Please what do you mean that UKBA cannot prove it. What if they see the balance in my statement that it is not enough to take care of the corporation tax. The fact is that my company year ends in May ending and my contract runs till July so definitely will get more fund in to take care of the corporation tax and money comes in to my account through my other business activities. So are you sure this is OK for UKBA? Please can you advice how I should be paying myself monthly when my agency pay into my business bank account. What is the correct and acceptable way to be paying myself. My accountant will prepare my Company account for the 9 month period I am claiming for earning. How can this be prepared to show that my earning are legal please? Many thanks for your advice. Regards, Gurrano

gurrano2 · Post by **gurrano2** » Mon Mar 18, 2013 7:53 am

Thanks. My accountant told me it is Ok as he will sort out the account and reconcile it since dividend earning and corporation tax are cumulative and will be calculated at the end of the year.

gurrano2 · Post by **gurrano2** » Sat Mar 23, 2013 6:19 pm

@karg_g: Please what document did you submit as you did not submit business bank statement? I heard they are asking people to submit now but it is supposed not to be a mandatory document.

Why do they need the company account? And what do they check for in it? Please advice as I need to prepare my company account for my declared dividend.

Regards

karg_g · Post by **karg_g** » Sat Mar 23, 2013 9:00 pm

Hi Gurrano2,

http://www.immigrationboards.com/viewtopic.php?t=126930

Regarding your pvt msgs here are some links:

http://www.contractorcalculator.co.uk/i ... ained.aspx

Rule: The Companies Act 2006 section 830 states 'a company may only make a distribution out of profits available for the purpose'. The company’s profits available for distribution are as stated above.

Good luck

gurrano2 · Post by **gurrano2** » Sun Mar 24, 2013 7:34 am

Thanks karg_g. But will this be an issue for home office? I will correct the error by subsequently not declaring ant more dividend till year is ended as those income can take care of tax and other expenses. I am in a contract with client till 2014. So I am sure of further earning to balance the account. Please advice as I have not been well guided by my accountant from the beginning. Thanks.

karg_g · Post by **karg_g** » Sun Mar 24, 2013 2:44 pm

Hi

HRMC is the one concerned about this. I was just outlining the best practice for drawing dividends. IMO u shud be fine.

Note: if u declare dividend and not legal HRMC will treat this director loan and there associated penalty with this.

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Self employment - Ltd Company Director

Self employment - Ltd Company Director

ltd company income before tax or after tax