2 definitions of a term ‘Self-employed’ and which one to use for UK visas.
We often hear
from the clients: “I am employed but by my own company” or “My accountant says I
am not self-employed, I have a limited company”. There are 2 definitions of a
word ‘self-employed’, one for HMRC (the taxman) and accountants, another for UK
Home Office and UK Border Agency, which is also used as a common sense
definition.
UK Immigration
Rules refer to self-employed people when it comes to meeting the points for
Earnings in the Tier 1 General, Entrepreneur categories as well as when
applying for an ILR based on them. Furthermore, rules on meeting the Financial
Requirement under Appendix FM and FM-SE when it comes to applying for a
Spouse/Partner/Fiancee visa.
For Home
Office (UKBA) ‘self-employed’ means a person who works for him/herself, rather
than working for someone else. This includes running a company or a shop as
well as being a one-man-business. It also includes ‘contractors’ – workers who
are employees in practice but who are self-employed ‘on paper’. So, here a term
‘self-employed’ includes both sole traders and limited company owners as well
as partners in a partnership or an LLP. For the purpose of the UK visas you
need to use categories for self-employed for a Spouse/Partner/Fiancee visas
(categories F and G) and you need to calculate your earnings as self-employed
for a tier 1 General extension or an ILR based on that. Likewise, for an
Entrepreneur visa you can register either a company or become a sole trader. Even
employed by your own limited company, and paying yourself a Director’s salary, will
count as self-employment for the visa purpose (unless you are a Director of a
large or public company and applying for a Spouse/Partner/Fiancee visa, there
are some concessions).
For the UK
taxman, HM Revenue & Customs, and for the accountants who help
self-employed people, self-employed’ means a sole trader. Sole trader is when a
person is running a business as ‘himself’, ie without setting up a company or a
partnership. Actually, a partnership is a group of self-employed people (ie a
group of sole traders), this is why partners are usually mentioned together
with the sole traders on the rules. So, when someone wants to become ‘self-employed’,
accountants would probably think he/she needs to become a sole trader and
register as such with HMRC and get a Unique Taxpayer Reference (UTR). A good accountant
would also offer a choice, to become a sole trader or to register a limited
company but many accountants tend to just do as asked – register as ‘self-employed’,
ie a sole trader.
This is why
there is a bit of confusion when it comes to applying UK visa rules for people
who work for themselves. We often hear “My accountant says I am not
self-employed because I have a limited company”. This is true for the 2nd
definition for the taxman but not for the 1st one for HMRC.
For
an individual advice or to make an application please contact us: info@1st4immigration.com or
visit www.1st4immigration.com
If you are an Immigration Adviser or a Solicitor
please visit our immigration Training and CDP website: www.1st4immigration.com/training
