Sole Trader, £18600.

Hi,

Im in a pickle really. Just wanting advice.

I am self employed began my trading in july 2014. My annual earnings is above £18600 but as i have started my business after the taxation year (april) it only show 9 months of my earnings (SA£302)

I am only a few hundred pounds short of the £18600 in the 9 months trading.

Is there anything i can do?

Plus I do not have enough of the required saving to compensate for the shortfall.

Thanks in advance, ZJay.

Is that gross income or net profit?

Gross income. But in my first year trading i earned above the threshold, the sa302 only shows 9 months of trading.

It's your net profit that should show £18,600.

Wanderer is correct. Only earnings after your business expenses have been deducted will be considered in the calculation. i.e the amount you pay tax on.

I've moved this thread as assuming you're not a student, you posted in the wrong forum.

Sorry, it is earnings before tax.

zhs8 wrote:Sorry, it is earnings before tax.

But if it before or after business expenses have been deducted?

zhs8 wrote:Sorry, it is earnings before tax.

Yes, but that's gross income. Maybe I haven't explained it clearly.
If for example you earn £18,600 before tax (gross)
Then you deduct allowable business expenses for HMRC
After deducting expenses you are left with taxable earnings of £16,000 (for example)
Your application will be decided on your nett earnings of £16,000 (not £18,600).

zhs8 wrote:Sorry, it is earnings before tax.

I agree. Why are people on here mentioning net after deduction. It clearly says that for a sole trader it is £18600 gross, not net.

For my actual years earnings its comfortably above the £18600 requirement but for the hmrc's tax year its just a few hundred pounds out.

Im thinking that this will hinder a lot if i proceed with my application.

For my actual years earnings its comfortably above the £18600 requirement but for the hmrc's tax year its just a few hundred pounds out.

Im thinking that this will hinder a lot if i proceed with my application.

pce950 wrote:

zhs8 wrote:Sorry, it is earnings before tax.

I agree. Why are people on here mentioning net after deduction. It clearly says that for a sole trader it is £18600 gross, not net.

Admittedly the Immigration Rules are confusing regarding gross income for the self-employed, but the issue regarding deductible expenses not being counted as income is given as follows:
(i) the gross taxable profits from their share of the business; and
(ii) allowances or deductable expenses which are not taxed will not be counted
towards income.

i.e By 'Gross' the Home Office mean the amount from which HMRC calculate tax.

See the leading paragraph on page 23
https://www.gov.uk/government/uploads/s ... _FM_SE.pdf

My apologies. I've re read the paragraph and it it is indeed gross income after tax. I find this absolutely RIDICILOUS as how on earth are the employed allowed to use their annual gross salary without tax deductions whereas the sole traders have to show the figure after all deductions and personal allowance. Beyond ridiculous. Well that's made things extremely hard now.

pce950 wrote:My apologies. I've re read the paragraph and it it is indeed gross income after tax. I find this absolutely RIDICILOUS as how on earth are the employed allowed to use their annual gross salary without tax deductions whereas the sole traders have to show the figure after all deductions and personal allowance. Beyond ridiculous. Well that's made things extremely hard now.

I found it equally confusing and had to re-read through the Immigration rules to confirm. The argument would be that the employed and the self-employed are actually on an equal footing as:
Employed = income before tax deducted (consider 'profit' as their base income)
Self-employed = profit before tax deducted (base income)

I'm sure someone else will be able to explain it far better. Wanderer probably if he's around