visa

I have just received my passport and received my HSMP visa extension under the points based system, so I just thought I would explain how I proved my earnings as a contractor through my own Limited Company.


NB – this does not apply to you if you pay yourself your salary and your dividends separately (e.g. if you only get dividend payments every quarter).



For proving my earnings, I had to provide two separate forms of evidence. I submitted about 9 months of bank statements that showed ~£35k being deposited from my limited company into my personal bank account .
The payments I made were a combo of salary (about £100/week) and dividends.
In order to prove both the salary and dividend components being paid together into my account, I needed payslips that showed my salary and my dividend certificate on the same payslip. My accountant couldn't provide me with payslips, so I made my own template on company headed paper, and at the bottom was the dividend certificate which I got signed by my secretary and my accountant. I also got a company stamp made up (ordered on line) and stamped every payslip with it. I generally paid myself weekly, so submitted one payslip per payment into my bank account.


I also got my accountant to write a letter that included a table listing every payment made to my bank account, broken down into salary, gross and net dividends. The final total amount I claimed was my total Gross income, consisting of my gross salary and my gross dividend (which was my net dividend paid into my bank account, + the amount of tax credit equal to net dividend times 1/9.)



EXAMPLE ONLY

e.g. for 52 weeks, A contractor's total salary would be £6030 (£115 per week, just below the threshold whereby you would need to pay NI and PAYE).

Say you paid yourself from your Limited company bank account into your personal bank account an additional £30k in dividends over the 52 weeks, this is your Gross net dividend. Then your tax credit would be £30k X 1/9 = £3333.33. Net dividend + tax credit = gross dividend, so gross dividend = 30,000 + 3333.33 = 33,333.33 (note that the tax credit is 10% of the gross dividend, i.e. 10% tax rate)



Net salary 6030

Tax paid on salary 0 (don't pay any PAYE or NI as under threshold)

Gross salary 6030



Net dividend 30,000

Tax Credit 3,333.33 (equal to net dividend X 1/9)

Gross Dividend 33,333.33



Total claim

Gross income = Gross salary + Gross dividend

= 6030 + 33,333.33

= £39363.33 – claim points on this amount.



Evidence required for above example:

· Full 12 months bank statements showing total of deposits into bank account (i.e. should add up to Total Net income which = net salary + net dividend).

· Full 12 months payslips showing for each payment your salary, net dividend, tax credit, and gross dividend. You also need to include a dividend certificate on the bottom of the payslip and get your accountant and secretary to sign it.

· Recommended to also supply letter from your accountant, and include with the letter a table of all the payments into your bank account (which will cross reference with your bank statements and payslips) that break down the payments into salary, net dividend, tax credit, gross dividend, and total gross income.

NB if you order your bank statements from the bank and they say "Duplicate" this is fine, as long as they are on headed paper (i.e. not a photocopy, or printed on blank paper, or printed off the internet). Also, I used a serious saver account for my maintanence funds which was fine. I have heard you cannot use ISA accounts to prove funds though…