Tier 1 Extension

[tier1seekr]

Hi Members!

I understand there are a number of threads for Umbrella earnings, but somehow I didn't get the required answer and hence, posting this as a fresh query. Expect speedy responses from you all..as extension is nearing..

To quickly explain my case in detail... (assuming I'm contracting through an Umbrella)

Let's say my monthly invoiced amount to the agency (by my Umbrella) is £3000 a month.

Out of this £3000, Employer's NI (approx £320) and Umbrella admin charges (£100) are deducted first. So, the remainder amount i.e., 3000-320-100 = £2580 is what is reflected as Total Gross Pay / Gross for Tax in my payslip. This Gross (£2580) is further sliced as following... (all figures are approximate)

Income Components:
----------------------------
Commission - £1900 - (A)
Holiday Pay - £280 - (B)
Salary - £400 - (C)

Deductions:
----------------
PAYE Tax - £630 - (E)
Employee's NI - £180 - (F)

Net Pay:
------------
(A+B+C) - (E+F) = £2580 - £810 = £1770

In this case, my Gross Pay in the payslip no where reflects the invoiced amount i.e. £3000. Instead, everywhere it shows £2580 (deductions are Employer's NI and Umbrella admin charges here).

In the payslip, there are two mentions pertaining to the Gross Income as follows:
Total Gross Pay £2580
Gross for Tax £2580

Now these two figures to my understanding, should be £3000 and £2580 respectively. What's the reason to have two separate headers, if the figures are same? Any ideas?

£3000 is what the Total Gross Pay I expect in the payslip, for my Tier 1 visa to extend. If it's £2580, it would be a problem to score points.

Please let me know what would be the Gross Income which will be considered by Home Office? (£2580 or £3000?)

Also, is the division of Gross Taxable Income (£2580) into Commission, Holiday Pay and Salary, a problem for visa extension?

Best Regards!

[geriatrix]

From what I understand - you are employed by X who invoices a client Y for the work you do. X pays you a salary (irrespective of whatever X may charge Y for the work you do).

Hence your gross salary (for PBS purposes) = 1900 + 400 + 280 = 2580
No.

[tier1seekr]

hi sushdmehta,

my company X invoices £3000 to the client/agency Y. And this £3000 is the amount I'm entitled to, as per the contract. This amount doesn't involve Umbrella's share (except for their NI i.e. employer's NI and admin charges which is for generating payslips, HMRC formalities etc). Meaning, they don't make profits from my invoiced amount, which is usually done by the vendor companies. They are just the accountants, more than anything else. And therefore, I suppose, there should be a mention of £3000 in the payslip as "Total Gross Pay". I'm alright with £2580 mentioned as "Gross for Tax". Is it worth discussing this with them?

Also, let's assume the modified payslip from above discussion results in following in the payslip:

Total Gross Pay - £3000
Gross for Tax - £2580

In this case, can I show my Gross Income for visa as £3000 now?

[geriatrix]

my company X invoices £3000 to the client/agency Y

What is "my company" in the sentence above? A company that you are a majority stakeholder of?

[tier1seekr]

No...it's not my company....I meant 'My Umbrella Company'. So I don't have any stakes in it. Simply put, it's an umbrella company just for accounting purposes, which deducts Employer's NIC and it's Administration charges, that's it. To clear it more, I'm a freelance contractor and using this company for my accounts. And therefore, I reckon the Total Gross Pay claimed should be £3000 instead of £2580.

Thanks!

Note: It's a company like Parasol.

[geriatrix]

Employer's NI contribution is not "your" earnings.
Admin charges by a third party that manages your payroll (and acts as your employer) is not "your" earnings.

So, your "gross salary" is 2580 and the entire gross salary is liable for income tax hence the same amount is reflected under "gross for tax".


Your "umbrella" is nothing but "an organisation acting as your employer" for the duration that you subscribe to their services.

[tier1seekr]

Alright, S. Mehta. So that explains the "Gross for Tax" component in the payslip. But there's another component called "Total Gross Pay" stated in my payslip. Is it logical asking the umbrella guys to have the Total Gross Pay component mentioned in the payslip as £3000? The reason to ask you this is, I want the "actual" monthly contract amount to be reflected somewhere in the payslip. So, it gives a complete insight to the case worker (here, I don't mind him/her considering my gross income as £2580, however, he/she should know my "actual" monthly worth).

On the contrary, if £3000 is not mentioned anywhere, he/she might think that I earned only £2580, which actually is not the case.

I apologise to lengthen this - but just trying to ensure I don't miss the bus...

[geriatrix]

You are missing the very fundamental principles, again:

1. Employer's NI contribution is not part of an employee's earning.
2. Expenses (in this case, the admin charge) is not part of an employee's earnings.

[tier1seekr]

I understand. So, I don't see any point discussing this with my Umbrella. Well, I'd have to think of maximising my income via another assignments then....hard times to go

Some quickies for you, and trust me, nothing after this

Is the Gross Income division between Commission, Holiday Pay and Salary a problem? I assume all these components together would account for Gross, isn't it?

Is there a need for the montly bank postal statements (for maintenance funds/previous earnings) to be signed/sealed? They are the usual HSBC UK statements I get via post which has logo, name, address etc.

Is there a need for a separate bank letter to prove the 90 days' funds? Or do the statements suffice?

Is there a need to get the salary slips/income statements signed/sealed? (these payslips don't have company logo. They just have a mention of company name).

I really appreciate your prompt replies!

[tier1seekr]

Hi sushdmehta/all

May I request you to please post for above queries. Pardon me for not having separate threads for these. Awaiting responses.

Thanks!

[tier1seekr]

Hi sushdmehta

Can you please reply to the queries above. I'm eagerly awaiting your reply.

Kind Regards.

[ldbright]

Your invoiced total amount will always be more them your gross as the umbrella deducted admins, claimed allowances etc off the invoiced total to reduce the tax you are to pay. To increase the gross total through umbrella company, what I did is not to claim and allowances. Yes, as a result, I paid more taxes, but the gloss pay is maximised, which means I can score required points for earning in shortest period. This is quite important (for me as least) as the job market is tough and not very stable at the moment.

[tier1seekr]

Hi ldbright

Thanks for replying.

Even I don't claim anything and pay income tax / employee's NI on Gross Income (excluding Employer's NI and Admin Fees). So, that's fine by me and I understand what Gross Pay would be considered by Home Office.

My Questions are:

Is the Gross Income division shown on payslip, as Commission, Holiday Pay and Salary a problem? I assume all these components together would account for Gross Pay, isn't it?

Is there a need for the montly bank postal statements (for maintenance funds/previous earnings) to be signed/sealed? They are the usual HSBC UK statements I get via post which has logo, name, address etc.

Is there a need for a separate bank letter to prove the 90 days' funds? Or do the statements suffice?

Is there a need to get the salary slips/income statements signed/sealed? (these payslips don't have company logo. They just have a mention of company name).

Kind Regards.

[ldbright]

Hi ldbright

Thanks for replying.

Even I don't claim anything and pay income tax / employee's NI on Gross Income (excluding Employer's NI and Admin Fees). So, that's fine by me and I understand what Gross Pay would be considered by Home Office.

My Questions are:

Is the Gross Income division shown on payslip, as Commission, Holiday Pay and Salary a problem? I assume all these components together would account for Gross Pay, isn't it?

Is there a need for the montly bank postal statements (for maintenance funds/previous earnings) to be signed/sealed? They are the usual HSBC UK statements I get via post which has logo, name, address etc.

Is there a need for a separate bank letter to prove the 90 days' funds? Or do the statements suffice?

Is there a need to get the salary slips/income statements signed/sealed? (these payslips don't have company logo. They just have a mention of company name).

Kind Regards.

To answer your first question: The gloss pay on my payslip was consist of basic pay, commission, holiday paye etc and my extension was approved without any problem. I felt CW was only interested in the gross pay figure.

For rest of the questions, please research the board as many people have kindly given the list of documents.

[tier1seekr]

Ok ldbright. Thanks for your answer. I will check the answers for rest on forum.

Kind Regards.

[tier1seekr]

hi members!
with reference to this ...i'm posting in the same topic..

i wud go for an extension in dec next month..when i try claiming points for UK exp in points-based calculator, the help window says that candidates who've got their visa under the rules in place before 6 april 2010 can claim points for UK exp..

now, my first entry clearance date for t1 general was 3rd feb 2011..
and my application date was 26th nov 2010..

looking at my application/entry clearance dates, am i eligible to claim these 5 points, given the rules applicable during my application date?

[geriatrix]

Useful tip: read the policy guidance before jumping to using the PBS calculator.

[MOGA84]

Hi Tier1 seeker,

Applications for leave to remain where the
applicant has, or last had, leave as a Tier 1
(General) Migrant under the rules in place
on or after 5 April 2010 and including the
rules in place after 19 July 2010.
126. If an applicant has claimed points in
the section for previous earnings, and these
were for earnings made both in the United
Kingdom and outside the United Kingdom, at
least £25,000 of the earnings must be United
Kingdom earnings to receive the points for
UK.

The guidance is very clear in this point.

[tier1seekr]

thnx MOGA84...this clears it...i shud get the UK exp points then...