Help required with Financial requirement for Self Employed Applying for Spouse Visa
 

Hi

I'm a Self Employed UK Citizen looking to apply for a spouse visa for my wife to join me in the UK

I know the annual income threshold is £18600

I have been referring to Appendix FM 1.7 for help and both myself and my accountant find it confusing

Under Self Employed section 9.4.1 (13e) it states:

" Where the person is self employed their gross annual income will be the total of their gross income from self employment"

and similar wording in (13f) both give the impression that the £18600 is the Gross Annual Income.

Then section 9.5.3 ( b) states :

" Where the self employed person is a sole trader or partnership or franchise the income will be the Gross Taxable Profits not including any deductable allowances, expenses or liabilities which may be applied to the gross taxable profits to establish the final tax liability "


Are they looking for the £18600 to be Gross Annual Income or Gross Taxable Profits ?

And if it is Gross Taxable Profits is that the amount after deducting expenses ?

Finally has anyone been successful here using the £18600 figure as Gross Annual Income ?

Re: Help required with Financial requirement for Self Employed Applying for Spouse Vi
 

If you read 9.4.1 completely it is saying that where self employed your gross annual income will be the total gross income from self employment AND any other employment income/non employment income/pensions etc received during the relevant financial year. It is just your total gross income nothing to do with what deductions might be applicable to that income.

In 9.5.3 it is being specific about self employed income from sole trader or partnership or franchise. Here the figure you use it that of Gross taxable profits, before deductable allowances or expenses etc.

Re: Help required with Financial requirement for Self Employed
 

Hi

Thank you for your reply and explanation.
Can I ask what the difference is between Gross Annual Income and Gross Taxable Profits ?

Will I be fine as long as my Gross Annual Income is over £18,600 ?

Gross Annual Income being my Total income without any deductions of any sort ?

Even my accountant found the wording of these paragraphs vague and ambiguous.

​​​​​​​I just want to make sure that it's absolutely right as I can't afford to have the application rejected.

Re: Help required with Financial requirement for Self Employed
 

Your accountant seems a little behind the ball! Here's the difference between a sole trader and self employed. https://www.yorkshireaccountancy.co....self-employed/ In essence they are virtually the same , but the reason for Gross taxable profit with a sole trader is because you may be employing someone for example and that has costs that reduce your profits. As simple self employed, there is just you , usually sub contracting etc and so all profits etc are taxable under the standard personal tax regime - less allowable expenses etc.
So, if there is just you and no one else - you never employ part time labour for instance, then gross income should be appropriate in your case.

Re: Help required with Financial requirement for Self Employed
 

Hi Quiltman thanks for your reply and explanation

I should have clarified that I work as a freelance locum in the health field and do not employ anyone else.

I have passed on both replies from here to my accountant and she messaged me as follows:

" I still think it is your taxable profit ,before capital allowances. Otherwise it doesn't make sense, say if your business was a shop, your gross taxable profit would not be gross turnover. It would be gross turnover less cost of goods, rent, advertising etc etc. You are no different your gross taxable profit is your turnover less motor expenses, insurance etc etc before capital allowance.
It's the use of the word "expenses" that is confusing. You need to get clarification on exactly what do they mean by expenses. "

You guys are saying I can use my Gross Income but she seems to thing they mean Gross taxable profit.
I need to be absolutely sure before I submit the application as a mistake can be very costly and time consuming.
​​​​​​​
Can anyone clarify this further ?

Re: Help required with Financial requirement for Self Employed
 

Are income and profit not the same figure? Your income should be after expenses, otherwise it wouldn't be income. Not sure why she's thinking the use of the term 'expenses' is confusing tbh!

Say (for example) your turnover is £50k and your expenses are £10, then your profit/income are £40k.

Or, to put it another way, whatever figure you have on your SA302 as taxable profit.

Re: Help required with Financial requirement for Self Employed
 

The confusion arises from Appendix FM 1.7 where section 9.4.1 refers to Gross Annual Income from self employment which to me means total income before any deductions.

Section 9.5.3 refers to Total Gross Profit which my accountant seems to thing means Gross Annual Income less the expenses.

My situation is such that if they are looking for Gross Annual Income then I'm above the threshold of £18600.

However if they are looking for Total Gross Profits and if that means Gross Income minus allowable expenses then I can't meet that threshold.

​​​​​​​That is why it's very important for me to establish exactly which they require.

Re: Help required with Financial requirement for Self Employed
 

If you mean ME when saying "you guys", NO I am not saying you can use your Gross income - I said that in the example to quoted the documentation is using the term Gross income ONLY to say that, even if self employed, you can other other income to qualify under financial requirements.

I agree with your accountant that it is Gross taxable profit you need to use.

Re: Help required with Financial requirement for Self Employed
 

Ah, see to me gross income means income after expenses - otherwise it wouldn't be able to be classed as income! If I invoiced £100k but spent £80k on business expenses, then IMO I could't claim £100k income, as only £20k of it would actually be able to be paid as income.

Money paid before deductions would be turnover to me, not income.

I agree with your accountant and SDG - your actual profit is the figure you need (i.e what ever is on your SA302 as taxable income).

Re: Help required with Financial requirement for Self Employed
 

Having read all the comments I am still confused.
The Home Office direction 13(e) states "the income will be gross taxable profits ...not including any deductable allowances, expenses or liabilities which may be applied to the gross taxable profits to establish the final tax liability.
These seems to suggest that Gross Income should be shown rather than Net Profits after expenses.
No wonder the accountants cannot understand which figures are required.
Can anyone explain what my above quote means and why.

Re: Help required with Financial requirement for Self Employed