Financ. requirement for self-employed - personal allowance

[JuneJuly]

Hello everyone,

Could you please advise on following:

Self-employed sponsor has got net profit for tax purposes, stated in his tax return as 20000 pounds.

Then personal allowance of say 7500 applies to calculate his tax liability.

Therefore the amount of the income that will be taxed is 12500 pounds.

Appendix FM-SE states the requirements for self-employment income:
............

(i) the gross taxable profits from their share of the business; and
(ii) allowances or deductible expenses which are not taxed will not be counted towards income.

So, what amount will be treated as sponsor's income for his spouse's visa - £20000 or £12500?

First one looks more logical.
But at the same time they mention "allowances"

Please help
If UKBA does not count personal allowance towards the income, the figure of 12500 will not be enough to meet financial requirement.

[MPH80]

AFAIK - they aren't including the personal tax-free allowance as part of those allowances.

They would be referring to business allowances - such as capital allowances/motoring allowances etc.

M.

[JuneJuly]

AFAIK - they aren't including the personal tax-free allowance as part of those allowances.

They would be referring to business allowances - such as capital allowances/motoring allowances etc.

M.

Dear MPH80,

Thank you for that!

Unfortunately, there is no explanation at all what exactly allowances they mean. Do you think it would be useful if we make an enquiry to UKBA and provide their answer to the British consulate with all supporting documents?
Or shall we just simply ignore it?

[MPH80]

I'd be pretty sure about my interpretation of it.

Otherwise everyone in the UK would have their income considered lowered by the tax free allowance - which doesn't happen.


M.

[JuneJuly]

I'd be pretty sure about my interpretation of it.

Otherwise everyone in the UK would have their income considered lowered by the tax free allowance - which doesn't happen.


M.

I agree, thank you again, no doubts anymore.

UKBA accepts P60s for employed people to prove gross income, and personal allowance actually applies when HMRC calculates tax being overpaid or underpaid within a tax year.
Should not be different for self-employed, roughly: Gross income minus deductible expenses = net taxable profit. And personal allowance only applies when calculating tax liability, not even in the tax return itself.