Tier 1 Extension. No Salary and only dividends?

[kesavasankar]

HI All,

I am about to apply for my second extension now. This is my first year as a contractor( from March 2013). I came to know from my accountant only now that he had filed my salaries with HMRC starting only from August 2013. For the aug month, he had filed £3600 and the rest for £720, meaning that aug is a culmination of all the previous salaries.

My understanding is that we cant show salaries with a huge gap in between. I am really worried about this situation and now one of my friend suggested that instead of showing the salaries drawn, we can show the dividends alone, which will definitely cover my earnings level needed.

Is it fine to use dividends insteads of salaries?. Will UKBA accept it?. Also my accountant says I dont need to pay NI for my salary level and hasnt paid. Please let me know if that will be a worry

[Mostar95]

As a company director you can decide how much salary you want to take in a month as well as not taking any salary. The accountant has done the right thing. Do not do dividend only, if you do dividend only, your earnings will come only as an investment instead of working for your own company and they wont give you point for earnings.


Check here:

http://www.ukba.homeoffice.gov.uk/sitec ... iew=Binary

[Mostar95]

Income that cannot be considered
Not all income will be considered for the purposes of awarding points in this section.
Unearned income from sources such as those listed below, will not be considered, as
it is has not been earned through employment.
• Dividends from investments (unless the applicant is working for the company
on a full time basis, or the payment is directly related to their employment)
• Property rental income
• Interest on savings
• Funds received through an inheritance
If part of the applicant’s income is paid as dividends the applicant should provide
evidence that this has been declared as earnings for tax purposes. This should be in
the form of either personal tax returns or the corporate tax voucher from the company.
Dividend vouchers will only be considered if they form part of the applicant’s earned
income and not dividends from investments.

[Mostar95]

And it is better to pay some NI as they count towards your state pension contribution. You can also increase your salary and pay some taxes. This will make your case stronger.