The UK government confirms that: “If you start working for yourself, you’re classed as a sole trader. This means you’re self-employed – even if you haven’t yet told HM Revenue and Customs (HMRC).”
You’re probably self-employed if you:
- run your business for yourself and take responsibility for its success or failure
- have several customers at the same time
- can decide how, where and when you do your work
- can hire other people at your own expense to help you or to do the work for you
- provide the main items of equipment to do your work
- are responsible for finishing any unsatisfactory work in your own time
- charge an agreed fixed price for your work
- sell goods or services to make a profit
Many of these also apply if you own a limited company but you’re not classed as self-employed by HMRC. Instead you’re both an owner and employee of your company.
Employed AND Self-employed at the same time?
You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings.
You can check whether you’re self-employed:
Selling goods or services
You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.
You’re likely to be trading if you:
- sell regularly to make a profit
- make items to sell for profit
- sell items on a regular basis, either online, at car boot sales or through classified adverts
- earn commission from selling goods for other people
- are paid for a service you provide
If you only occasionally sell items or rent out property (for example through auction websites or short-term rental apps), check if you need to tell HMRC about this income.
Contact for advice if you’re not sure whether you’re trading.
Self-employment and the Financial Requirement for a Partner Visa
When applying for entry clearance or leave to remain as a partner, there are several ways to meet the financial requirements of Appendix FM. I will talk about how you can meet your financial needs by relying on income from self-employment.
The UK’s Immigration Rules say that a person must have a gross income of at least £18,600 per year. If the applicant and their partner have children, the income limit goes up by £3,800 for the first child and another £2,400 for each child after that. Please note that this does not apply if the child is British or an EEA national with the right to be admitted to or live in the UK under the Immigration (European Economic Area) Regulations 2016.
Under the Immigration Rules, what does it mean to work for yourself?
Self-employment can be done as a sole trader, where one person owns and runs the business, a partnership, where two or more people own and run the business, or a franchise, which uses a proven business model. At the time of the application, the self-employment must still be going on.
You can also rely on being a Director or employee if you have formed a limited or “Ltd” company in the UK. A specified limited company is one in which the applicant, their partner, or listed family members hold shares, either directly or indirectly, and fewer than five other people hold the rest of the shares. Depending on what kind of self-employment you have, the evidence requirements will be different.
Category F: Your last full year of working for yourself
There are two specific ways that self-employment income can help meet the financial need. These applications are called “Category F” and “Category G.”
For a Category F application, the self-employed person (either the applicant’s partner or the applicant themselves, if they are legally self-employed in the UK) can use their income from the last full financial year to meet the financial requirement.
Category G: Average of the last two full years of being self-employed
For a Category G application, the self-employed person (either the applicant’s partner or the applicant themselves, if they are legally self-employed in the UK) can use the average income from the last two full financial years to meet the requirement.
This is the average of the two financial years and gives the applicant some wiggle room if they can’t meet the requirements in Category F. For example, if the gross annual income in Year 1 was £15,000 and in Year 2 it was £22,200 or more, the applicant could use Category G to show a mean average of £18,600 over the two full financial years.
How do you figure out the financial year for F and G?
The Immigration Rules say that for people who rely on self-employment as a sole trader, as a partner, or in a franchise, the relevant financial year is the one covered by the self-assessment tax return, which runs from April 6 to April 5 of the next year. This will match the Statement(s) of Account that are needed (SA300 or SA302.)
Self-employment from outside the UK
If the applicant is depending on their partner’s income from self-employment outside of the UK, the relevant financial year will be based on how taxes are handled in that country. As part of an application, you may need more explanations and supporting information from an accountant in another country.
In the case of Hameed’s case (Appendix FM, Fiscal Year)  UKUT 00266 (IAC) said that the self-assessment tax year is the financial year for Appendix FM, not the financial year chosen for accounting purposes. In this case, the Appellant couldn’t show the necessary income under Category F, in the last full financial year, or Category G, by averaging the last 2 full financial years, because their business didn’t start until after the first half of the tax year had passed. Instead, they tried to use the mean average of their business’s last two accounting years. Upper Tribunal Judge Macleman turned down this other idea because it was clear that it did not meet the rules.
The Immigration Rules make a difference in how a financial year is calculated for people who work in the UK as a director or an employee (or both) of a certain limited company. In this case, the relevant financial year is the year listed on the Company Tax return CT600, which is the same as the company’s 12-month accounting year.
When an applicant has more than one financial year, like if they are both self-employed as a sole trader and a director of a certain limited company, the self-employed income cannot be added together to meet the financial requirement.
A person applying for benefits can’t combine their own self-employment income with that of their partner if their incomes are based on different financial years. The current advice from the Home Office says that this would not be a fair or accurate way to figure out someone’s annual income.
Can you make money from your own business and other jobs at the same time?
You can meet the financial requirement by adding together income from Category F or Category G, income from salaried and non-salaried work, income from other sources, and pension income. But all of these sources of income must come from the same financial year(s) and still be bringing in money at the time of application for them to be counted.
As mentioned above, any income from working as a director of a certain limited company in the UK, including dividends from the company, is counted as income under either Category F or Category G.
You can’t mix income from Category F or Category G with money you already have saved. The reason is that it wouldn’t be fair or give an accurate picture of how much money a couple really has. It also runs the risk of counting the same money twice, once as income from self-employment and then again as cash savings.
Can you count on income from self-employment in another country?
You can use money from self-employment abroad, but only if it comes from your partner and they are moving back to the UK with you as the applicant. In this case, your partner will need to show that they are self-employed and will continue to be so in the UK, or that they have a job offer that starts within 3 months of their arrival in the UK. You will need to show proof, like a signed employment contract or contract to provide services, information about buying or renting business space, or a partnership or franchise agreement.
What specific proof do I need to show that I work for myself?
Appendix FM-SE lists very specific requirements for the written proof that must be included with an application in order to count income from self-employment as a source of income.
For the sole trader, partner, or franchise route, you will need to provide annual self-assessment tax returns (SA300/SA302), proof of registering with HMRC as a self-employed person, proof of your Unique Tax Reference number, and business and personal bank statements for the full period relied upon (either one or two full financial years).
You must also show that your work as a self-employed person is still going on. You also have to give us one of the following:
- If the business is required to have them, audited accounts for the financial year(s) used;
- Unaudited accounts for the financial year(s) used, if the business is not required to have audited accounts;A certificate of VAT registration and the VAT return for the financial year(s) relied on if the turnover is more than £79,000 or was more than the threshold during the last full financial year;
- Any proof of planning permission or permission from the local planning authority to run the type or class of business at the trading address, if this is needed; or
- If it applies, a franchise agreement must be given.
- For a director or employee of a certain limited company in the UK, you will need to provide: (1) a Company Tax Return (CT600) for the financial year(s) relied upon and proof that this has been filed with HMRC (i.e. an electronic or written acknowledgement); (2) proof of registration with the Registrar of Companies at Companies House; annual audited/unaudited accounts (as required) for the financial year(s) relied upon and an accountant’s certificate of confirmation; corporate/ business bank statements covering the same 12-month period(s) as the CT600(s) relied upon; and a current Appointment Report.
Further evidence will be required including one of the following documents:
- A certificate of VAT registration and the VAT return for the financial year(s) relied upon if turnover is in excess of £79,000 or was in excess of the threshold which applied during the last full financial year;
- Proof of ownership/lease of business premises; or
- Original proof of registration with HMRC as an employer for the purposes of PAYE and National Insurance, proof of PAYE reference number and Accounts Office reference number.
If you receive a salary you will be required to provide payslips and a P60 (if issued) for the relevant period and personal bank statements showing receipt of salary. Likewise, if you receive dividends from the company you will need to provide dividend vouchers for all dividends declared during the period of the Company Tax return CT600.
There will be a need for more proof, such as one of the following:
A certificate of VAT registration and the VAT return for the financial year(s) relied on if the turnover is more than £79,000 or was more than the threshold during the last full financial year;
Proof that you own or rent the business space, or original proof that you are registered with HMRC as an employer for the purposes of PAYE and National Insurance, as well as proof of your PAYE reference number and Accounts Office reference number.
If you get a salary, you will need to show payslips, a P60 (if you got one), and personal bank statements that show you got a salary during the relevant time period. Also, if you get dividends from the company, you will need to show dividend vouchers for all dividends declared during the time of the Company Tax return CT600.
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