Response I got from HO on self-employment

[US_to_London]

Hello all,

I'm in a situation where I'm moving to UK on a Tier 2 sponsored visa, but have a software product that generates sales.

I specifically asked my new employer about the legality of this, and they had their legal representative contact HO to find out about this.

We waited weeks to hear back, but here is the response we received in October 2016:

We have finally received a response from the Home Office (see below).

The Home Office have confirmed that a Tier 2 migrant may engage in supplementary self-employment, provided that:

• the self-employed activities are in the same profession and at the same professional level as the job for which you were granted the Tier 2 visa; and
• that you restrict any time spent on the self-employed activity to 20 hours per week or less; and
• any time spent working on the self-employed activity is outside of the normal working hours of the job for which you were granted the Tier 2 visa; and
• you continue to work for your sponsor in the job for which you were issued the Tier 2 visa.

Based on the information provided, your proposed side-business should satisfy the above requirements.

Note that they call it "supplementary self-employment". I take this to mean you're not allowed to run a side business of your own full time, but if it meets the above criteria, then it is allowed.

What isn't clear to me yet is how I register/file taxes for this business. Since I started this "side business" in the US, do I just keep reporting it there? Or, do I need to officially register it in the UK? Wish the turnaround time for a HO response was quicker, it took a long time just to get this information.

What are your thoughts? I know some members of this forum have been adamant in self-employment of any kind not being allowed under the Tier 2 visa, but the response I received would indicate otherwise, at least with constraints.

[manci]

This topic has been discussed on the forum before and opinions differed. Mine was that self-employment is allowed for T2 sponsored workers subject to the supplementary employment rules set out in para 226 of the T2 policy guidance:
https://www.gov.uk/government/uploads/s ... 1_2016.pdf

The Home Office seem to have confirmed this in your case.

Consider also the definition of "employment" in the immigration rules:

"employment” unless the contrary intention appears, includes paid and unpaid employment, paid and unpaid work placements undertaken as part of a course or period of study, self employment and engaging in business or any professional activity."

You'll need to register as self-employed in the UK:
https://www.gov.uk/log-in-file-self-mule ... f-employed

[KianKiani]

I have the same issue, I am here under Tier2 Visa, working in a game company. I just follow the rules,
and in whole tax year had 17 days freelance job in the same profession and level even less than 20 hours per week. but I am not sure can I register as self-employment!!
I do not know why they did not mention the next step

Could you please tell me if there is anyone that had the same issue before? and if you paid the tax, how did you do that?

[feivourite]

Hi, I am in the same situation, please can anyone advice on how the tax issue is addressed for this matter?

[ds2016]

Same question here. I am now really confused after reading this thread - people like CR001 said it quite confidently multiple times on this forum that self-employment is not allowed. Now I see this response from HO which suggests the contrary...

[Frontier Mole]

Self employment is allowed on Tier 2 as long as it meets the criteria in full as set out in the email.

Previously the thought process was that no self employment was allowed and that was a kind of an end to the discussion. It was tested in court and the legal answer was to move the self employment activity to supplementary working with the rules attached as set out in the original OPs email above.

What it does stop is lower and outside the SOC code of your COS activity, so it is not a cart blanch to get on a do whatever. So it is very much a narrow field for self employment. One other point to note, you can not contract yourself out to third parties as that contravenes the broader tier 2 requirements.

Examples of cases I am aware of where supplementary self employment has been seen and accepted: books / articles published on the work area / profession, programming or systems development in your own right, research work (funded), one off paid for activities e.g. trouble shoot a one-time issue.

However the overriding point is that the activity meets the general supplementary working rules.

Hope that helps clear things up a bit better?

[ds2016]

Self employment is allowed on Tier 2 as long as it meets the criteria in full as set out in the email.

Thank you for clarifying this.

My confusion is coming from the fact that it's been said quite a few times on this forum that self-employment is strictly prohibited under Tier 2. A couple of examples (second one is from just two months ago):
indefinite-leave-to-remain/tier-2-to-il ... 76513.html
uk-tier-2-employer-sponsored-visas/tier ... 44516.html

Is it the case that there are different interpretations of the immigration law when it comes to self-employment?

[Frontier Mole]

If you had asked me say four / five years ago I would have unequivocally said no to any self employment. That was the position held by the majority of the Home Office and it was pursued as such. HMRC tax returns for self employment were matched to T2 visa holders and action would be taken at visa extension or ILR. There were a number of refusals based on those caught in that net.

Things changed I believe after a successful legal challenge and self employment was properly brought under the banner of supplementary working. The restrictions that apply to supplementary working have not varied or changed and self employment is treated in the same way as working for another business for 20 hours per week.

Where things get difficult for self employed Tier 2 individuals is where they are plainly engaged in activity that does not fit to their SOC and / or the level of work is below RQF6. Another issue is non filling of tax returns but that is an entirely different matter. Lastly there is the issue of proving that you only spend 20 hours or less doing the activity.

So being self employed as a Tier 2 visa holder is fraught with pitfalls and potential issues that could impact on either a future visa extension or ILR application.

I am not saying it is easy and people do manage it but it takes more planning and more effort beyond that of a settled self employed person.

So if you are properly considering being self employed under supplementary working make sure you are cautious and very measured in what you do.

[ds2016]

I see. Thanks a lot!

Can I ask you a couple more questions:

One other point to note, you can not contract yourself out to third parties as that contravenes the broader tier 2 requirements.

I am not quite sure if I understand this - where exactly is the boundary between "self-employment" and "contracting yourself out to third parties"? Say, if I occasionally do some work for a company in my home country, send them invoices and get paid to my UK bank account - can this still be considered as "self-employment"?

Another issue is non filling of tax returns but that is an entirely different matter.

I was actually just about to ask a related question - what if I only make, say, £800 a year with my self-employment activities? Is it correct that I don't have to register as self-empoyed / send a tax return in this case as this would fall under the £1,000 "trading" tax-free allowance?
https://www.gov.uk/income-tax-rates

[Frontier Mole]

Contracting out - you are signed up to an employment or resourcing company and they place you with another business to work. . So you are agency staff or a contractor in effect. The Home Office refers to it as third party working.
Self employment is defined as you working for you or you directly supplying services or goods to another party.

I am not qualified to comment on the taxation matter so I will leave that to others.