UK CITIZENSHIP APPLICATION: Employment Question

[sham_neel]

My daughter is an applicant. She is a student and is currently graduating. As a part-time job, she has been tutoring with X Academy once a week since September 2023. The academy credits the money to her account every month based on her tutoring hours. She earns less than £400 per month (less than £75 per week).

Below is the contract details between X Academy and my daugther.

1. This contract is between X Academy (the ‘Company’), a tuition company operating as
an Employment Business (‘EB’), and the tutor (the ‘Tutor’), a self-employed individual in
the business of providing tuition (amongst other services). The Tutor is not working
through their own limited company (a Personal Service Company, or PSC).
2. The Tutor is legally responsible to the Company for delivering the tuition (or other
services) to the Company’s Client for the agreed Fee. The Tutor is not employed by the
Company.

Will she select the option Yes or NO under the question "Are currently employed?"?

When she selected the 'Yes' option and entered the following details, the next document section requested the document below."

"Miss X's most recent tax year account statement and corresponding HMRC tax return as proof of self-employment."

Kindly advise me.

[contorted_svy]

Has your daughter registered as self-employed? If not, she has been evading taxes! Immediately get her to register and declare any income for the past year(s) (you are lucky that the deadline is end of Jan for the previous tax year).

Once she has done that she will need to declare that she is self-employed and produce her tax report for the last tax year (the one that finished in April 2024).

[contorted_svy]

Forgot to state: the limit for self assessment is £1000 per tax year, so your daughter definietly needs to register for self assessment and complete a return ASAP if she hasn't already.

[sham_neel]

@contorted_svy thank you for your quick reply.

She earned £1,200 in the financial year 2023-24. She was not aware of self-employed and incorrectly assumed it would be covered by the personal allowance.

1. After your reply, I googled self-employment and found that self-employed individuals should register by 5th October and complete the tax return by 31st January.
If she is unable to complete the return by 31st January because the UTR is not received before the deadline, can she file the return after 31st January?

2. As she is working on a contract and not employed by the academy, can she choose the option 'No' under the application section 'Are you currently employed?'?

3. Should she wait to apply for citizenship? Are there any implications if she files the return after 31st January (due to point 1) and resolves it afterward?"

[contorted_svy]

1 - This is something that she needs to resolve with HMRC, I don't know the answer.
2 - I suppose so.
3 - There are two approaches here I feel:
- refrain from applying until she registers for self-assessment, files her return, and pays any fines she owes HMRC for late registration if applicable. Hers is not a massive infraction but it is one and she would need to correct this soon anyway, may as well wait a few months until this is sorted for peace of mind. If she gets a fine, she will need to declare it under the Good character requirement. If she sorts this out as quickly as possible, it is possible that HMRC will understand it was a mistake in good faith and waive the fine - this has happened to me personally when I declared a wrong date for my self-employment which triggered a fine.
- Reply that she is not employed or self-employed, wait until after she gets a citizenship outcome and then regularise her position with HMRC. This latter one is riskier of course.

[sham_neel]

@contorted_svy , Thank you very much for your advise.

[contorted_svy]

Thinking about this again - here is what I suggest.

Check carefully her income in the tax year April 2023 - April 2024. If this total is less than £1000, she can go ahead and register as self employed declaring as start date the 8 April 2024. Once she has done that she can select she is self-employed and declare she is waiting for her UTR and apply for citizenship. This approach would be fine if she earned less than £1000 in that period of time.

If that is not the case what I stated above applies.

[sham_neel]

Another thought, If she stops her weekend tutor work on 20th January, she can submit an application on 25th January. In this case, she will not be self-employed, and technically the answer to the question, 'Are you currently employed?' will be 'No'.

[contorted_svy]

That doesn't matter. If she has registered as self-employed (as she should have) she would still answer Yes. Also she has to regularise her position with HMRC before applying as not doing so, if this cam eto light, may count as deception.

[contorted_svy]

The issue is not if she is employed or not - employment is not required for naturalisation. The problem is she didn't register for self-assessment when she had to and didn't pay her taxes, putting her at fault with HMRC. That is the core of the problem.

[sham_neel]

I think there is no tax pending because the earnings are well below the personal allowance.

The rules regarding personal and trading allowances, and how they interact, are quite confusing for common people.

[contorted_svy]

I think there is no tax pending because the earnings are well below the personal allowance.

The rules regarding personal and trading allowances, and how they interact, are quite confusing for common people.

This is may be correct. However one is required to register as self-employed and fill a self-assessment within the correct dates if earning more than £1000 to be in the clear with HMRC, even if no tax is due; it is up to them to decide what tax is due based on any other income. Not doing so puts one at fault with HMRC. Your daughter has missed the deadline to register as self-employed already.