Using Self-Employment to meet the Settlement UK Spouse Visa Income Threshold

General Background

The financial requirement of £18,600 generally must be met by anyone applying for entry clearance, leave to remain or indefinite leave to remain in the UK as the non-European Economic Area (non-EEA) national partner or dependent child of a person, who is either a British citizen or has Indefinite Leave to Remain in the UK. Please note that sometimes the financial requirement might be a bit higher if sponsoring a non-EU partner and child/children.

There are different options to meet the income threshold and it can be met via income from employment, pension, cash savings or non-employment income i.e. rental income. The sponsor can also meet the income threshold using income from self-employment, however, it might turn out to be one of the most difficult options, so this article is to highlight some common pitfalls.

Who is classed as self-employed?

If the sponsor is a director of a limited company, sole-trader, partner or in a franchise they will fall under this category.

But what is less obvious is that if a sponsor’s family member i.e. parent, grandparent, child, stepchild, grandchild, brother, sister, uncle, aunt, nephew, niece, or even first cousin, holds more than 10% shares (directly or indirectly) in a limited company where the sponsor works as an employee, then the sponsor might also fall under this category. If this is the case, then the sponsor would have to submit not only evidence of their employment e.g. payslips and bank statements, but also evidence of the business itself e.g company tax returns and profit and loss accounts, with their application.  

General rules of meeting the income threshold via income from self-employment

As a general rule, if a sponsor wishes to rely on income from self-employment they need to have been in business for at least 12 months and file their tax return with the relevant government; in the UK this would be Her Majesty’s Revenue and Customs (HMRC). It also applies even if a sponsor is already able to meet the income threshold within three months since opening the business, as unfortunately they would have to wait until they have filed their first tax return.

Another option to meet the financial requirement is to use an average of the income from self-employment received in the last two full financial years. It can work for people who for one reason or another since opening a business are not having the best financial year, but where previously had a better financial year.

NB: However, please note that this is not an avenue for those who following a great financial year are now insolvent/bankrupt. 

Evidential requirements

Generally speaking, if relying on the last financial year or on the last two financial years, the sponsor must make sure that the evidence submitted with their application covers the relevant financial year(s) – most recently ended. The evidence needed differs, depending on whether the sponsor is a sole trader or running a limited company.

Example: As a sole trader in the UK the sponsor would have to submit annual self-assessment tax returns and statement of Account (SA300 or SA302). If running a ltd company then it would be company Tax Return CT600 for the last full financial year and evidence this has been filed with HMRC, such as electronic or written acknowledgment from HMRC and Corporate/business bank statements covering the same 12-month period as the Company Tax Return CT600.

NB: Please note that the list of documents required is much longer, and that this is only a highlight. Still, a sponsor working as a sole trader would need to submit 12 months’ bank statements with their application but might not necessarily have a business bank account, also, when running a ltd company the sponsor would have to submit not only business bank statements but also a personal ones.  

Hence, it is a good idea to contact a UK immigration lawyer as soon as the new financial year is about to start, in any case definitely before filing a tax return, as it might turn out that your accountant sees the most efficient way of filling your tax return (claiming lots of expenses and reducing the tax liability), but that this is incompatible with meeting the income threshold. This presents a unique problem for a self-employed person, as once you have filed your tax return you might not be able to amend it, which can result in waiting for one year before loved ones are able to join you in the UK.  

It is worth highlighting that the most common reason why applications are refused is not that people do not meet the income threshold, but rather because they have not submitted all the relevant evidence needed! Unlike income coming from employment, with self-employment the evidential requirements could be much more complex, as it is not simply submitting the last 6 months’ payslips, bank statements and letter from employer.

Comparison example: When it comes to self-employment the relevant period would be extended to 12 months’ worth of documents, but for the last full financial year, plus recent ones to show that the self-employment is outgoing. Hence, if working as a self-employed taxi driver, you might need your latest annual tax return covering period from April 2018 to April 2019 and recent bank statements within the last three months to show that the business is still outgoing.

Further, when combining self-employment with other categories, i.e. pension you must make sure that this covers the same time period. Please also bear in mind that income from self-employment cannot be combined with savings!

Final Comment

Relying on income from self-employment might be an avenue for many, but not for everyone. Hence, you need to be careful, as the rigid immigration rules are full of pitfalls. Again, the documents might differ depending on the type of the company you are running, and some might find it more difficult than others to produce the relevant documents required by the immigration rules.

Often the key to being successful with your visa application is to be consistent with the period relied on (it must be the latest financial year) and you should not forget to show that your business is ongoing.

Once more, try to contact a solicitor as soon as possible – definitely before filing the tax return.

If you have been affected by any  UK immigration matter, please contact Solicitor Tito, a UK immigration and human rights solicitor, for a free initial consultation about your legal options. Call 07544 669131/01163800744 or on Skype: tito.mbariti.