Gross or net income?

[markjoshi]

For tier 1 general visa is following true:

Self employed income would be assessed NET
Employment will be assesed GROSS

Will be great if someone confirms

NET = Income - Tax????

[desperado1306]

For tier 1 general visa is following true:

Self employed income would be assessed NET
Employment will be assesed GROSS

Will be great if someone confirms

NET = Income - Tax????

Correct about Employed.

[John]

markjoshi, I think you are in danger of trying to make a simple matter quite complicated!

For both employment and self-employment it is the pre-tax amount that is important. But the difference is that whilst the employment income can easily ascertained, from payslips etc., for self-employment it is the profit that is important. In order to find out the profit it will be necessary to prepare accounts, and those accounts will show both income and also expenses relevant to earning that income.

[markjoshi]

John,
Thank you so much for information. I have asked accountant to prepare accounts. Profit = Income-Expense
However; he tells me that i also need to deduct tax amount to get net income.
As in UKBA guidelines they say they need @NET income@

So, I am confused if i should provide figures after tax to UKBA. Please let me know.

Thanks in advance!

[John]

However; he tells me that i also need to deduct tax amount to get net income.

Well it depends what tax we are talking about. That is, if you have employees then the employer's NI contributions you need to pay are part of the expenses of the business, and thus will reduce the profit. Likewise if you need to pay over things like VAT.

But if we are talking about your income tax liability on the net profit, it would not be correct to deduct that in order to get at the net profit.

Question ... we are talking here about a business conducted in your own name ... and not a business conducted by a Limited Company that you own?

[markjoshi]

i am self employed in uk. i have employeers paye number which entitles me to hire people but i am working on my own at this moment.
so, tax for self employed almost 27% in uk is amount i shd deduct before shoing my income to h.o. or just my expense

[John]

The amount you should show is the net business profit, before deduction of any personal tax liability payable by you on that net business profit, or before deducting any Class 4 NIC liability on that net business profit.