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Self-Employed Allowances (financial requirements)

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Thisishard
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Joined: Thu Jun 11, 2020 3:10 pm

Self-Employed Allowances (financial requirements)

Post by Thisishard » Thu Jun 11, 2020 3:41 pm

Hello all,

I’m applying for a spouse visa under category F — self-employed income as a sole trader, however this line in Appendix FM 1.7 just punched me in the face:
Where the self-employed person is a sole trader or is in a partnership or franchise agreement, the income will be the gross taxable profits from their share of the business in the relevant financial year(s), not including any deductable allowances, expenses or liabilities which may be applied to the gross taxable profits to establish the final tax liability.
Specifically the the part about deductible allowances.

I use two allowances in my tax return the “personal allowance” of £12,500 and the “Rent a room scheme” allowance of £7500.

If I deduct these two amounts from my gross profit, or even just one of them I will be well below the pre-tax £18,600 threshold needed to pass the financial requirements.

Am I reading this wrong, or do they mean a different type of allowance that I’m totally ignorant of?

Thank you for reading this.

geoeng
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Joined: Fri Aug 30, 2019 11:54 am
Canada

Re: Self-Employed Allowances (financial requirements)

Post by geoeng » Fri Jun 12, 2020 7:54 am

This isn't the most common category used for applying for a spouse visa, so you might find the number of people knowledgeable about the specifics of this category to be quite small. For trying to interpret something that you think may not be explicit in the guidance, you may be best speaking to an accountant with some knowledge of the immigration rules or an immigration professional with some knowledge of accounting for self-employed people to ensure you get it right.
I'm just a guy on the Internet who immigrated to the UK. My opinions are based on my experience and interpretation of the immigration rules and should not be considered legal or immigration advice; your mileage may vary.

TODMATT
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Joined: Wed Jun 13, 2012 1:09 pm

Re: Self-Employed Allowances (financial requirements)

Post by TODMATT » Fri Jun 12, 2020 10:50 am

They are talking about the NET PROFIT after all business expenses have been deducted.

You will need to work out with your accountant on you can reduce those allowances you have mentioned.

Your turnover - business expenses = Gross taxable profit AKA NET PROFIT.
My opinions should not be constituted as an immigration or legal advice.

Thisishard
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Joined: Thu Jun 11, 2020 3:10 pm

Re: Self-Employed Allowances (financial requirements)

Post by Thisishard » Fri Jun 12, 2020 12:58 pm

Thanks for the input TODMATT and geoeng,

I don’t have an accountant; I currently do my own books — I am aware that I need one in order to get a certificate of confirmation and am in the processes of looking for an accountant that can provide that service.

geoeng: my confusion here is that these allowances are not business expenses, they are the standard allowances that everybody is entitled to when filling out their tax return.

So is it: Turnover - Business expenses - Personal allowance - rent a room scheme = Gross taxable profit

TODMATT
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Re: Self-Employed Allowances (financial requirements)

Post by TODMATT » Sat Jun 13, 2020 5:16 am

How much is your total profits from your self employed? The answer to your question is YES!
My opinions should not be constituted as an immigration or legal advice.

Thisishard
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Re: Self-Employed Allowances (financial requirements)

Post by Thisishard » Sat Jun 13, 2020 9:12 am

TODMATT wrote:
Sat Jun 13, 2020 5:16 am
How much is your total profits from your self employed? The answer to your question is YES!
Oh no, I guess it’s not meant to be. I make around £26,000 after deducting expenses.

So the £18,600 threshold is a lie as every (tax paying) British worker whether employed or self-employed has a default personal allowance of £12,500, which would make the actual threshold £31,100.

Even if I don’t use the rent a room allowance I’m still only making (26,000 - 12,500) = £13,500 taxable profit.

Is the answer to my question still yes, or did I forget to carry the 1?

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