Expats freelancing in the UK
Tier 1 (formerly HSMP)
Tier 1 General (formerly the Highly Skilled Migrant Programme (HSMP)) is the ideal work visa for highly skilled professionals who wish to freelance in the United Kingdom. The visa allows the holder to work completely unrestricted for an initial period of three years, and then a further two years on extension. Those that secure Tier 1 General visas can use Contractor Limited Companies or Umbrella Companies to deal with freelance income, however care must be taken when deciding upon a provider as issues can arise at the extension point due to inadequate payment documentation or problematic tax structuring.What is Tier 1 General?
Tier 1 refers to the top tier of the Governments five tier Points Based Immigration System (PBS). It is designed for highly skilled professionals and comprises four subcategories; General, Entrepreneur, Investor & Post Study Work. This guide is focused on the General subcategory of Tier 1. For information on Tier 1 Entrepreneur, Investor & Post Study Worker please see www.CommonwealthContractors.com.
Qualifying under Tier 1 General
In order to qualify under Tier 1 General an applicant must score at least 75 points from four points scoring areas (Qualifications, Previous Earnings, Age & UK Experience) and satisfy the English Language & Maintenance requirements. At present applicants are required to possess at least a Masters Degree however this requirement may be reduced to a Bachelors Degree in the future (the requirements were increase from a minimum Bachelors to a Masters Degree in April 2009 in response to the economic conditions of the time). Otherwise applicants score more points for prior earnings up to £40,000 per annum and can claim greater points the younger they are. For a full breakdown of points under Tier 1 General please see http://www.commonwealthcontractors.com/Tier_1_(General)_Visa_Applications.html
Freelancing in the UK
Although an individual holding a Tier 1 General visa can use any form of structure to deal with freelance income (i.e. Contractor Limited Company, Umbrella Company etc) big problems can arise when applying for an extension after 3 years.
With a Contractor Limited Company an individual normally sets an artificially low salary in order to minimise National Insurance Contributions and then takes income in the form of dividends and business expenses which are more tax efficient. This is fine if you are a UK National with a British Passport however those that need to extend a Tier 1 visa may find it difficult to claim points for Previous Earnings.
Likewise Umbrella Companies can cause problems when extending a visa under Tier 1 General. Some Umbrella Companies will only provide web based payslips and are not prepared to stamp or sign documents. They also encourage freelancers to max out on business expenses (i.e. travel, subsistence, accommodation etc) in order to maximise retention, however reimbursed business expenses are not an allowable form of remuneration and therefore can prevent an individual from gaining enough points under the ‘Previous Earnings’ scoring area.
Further Information
If you are considering applying for or extending a Tier 1 Visa or you wish to freelance in the UK it is highly recommended that you seek professional advice from an organisation that deals with both freelancing in the UK and Immigration.
This information has been provided by www.CommonwealthContractors.com in association with OISC Registered Immigration Partners.
Tier 2 (formerly UK Work Permit)
Tier 2 General is not ideal for freelancers, however many highly skilled professionals who wish to work in the UK, especially IT Consultants, find that working for a Consultancy shares many of the benefits of out and out freelancing. What is Tier 2 General?
Tier 2 is the second level of the Government’s five tier Points Based Immigration System (PBS), it is designed for skilled workers with an offer of employment from a Tier 2 Licensed UK based employer. The tier consists of four subcategories (General, Intra Company Transfer, Sports People & Ministers of Religion); this guide will concentrate solely on Tier 2 General.
Unlike the old Work Permit System an employer that wishes to recruit an individual from outside the European Economic Area (EEA) must first gain a Tier 2 License from the UK Border Agency (UKBA), where the individual does not already posses a satisfactory visa of course (i.e. Tier 1 General, Ancestry etc). In order to do this the company must demonstrate that it is operating satisfactory Tier 2 related HR processes & prove that it is a genuine organisation with a requirement. Once Tier 2 licensed an organisation will appear on the UKBA’s register of sponsor. Individuals are highly recommended to check the register before accepting a position or handing over any money as a number of scams have been well documented.
Qualifying under Tier 2 General?
In order to qualify under Tier 2 General an individual must score at least 50 points for Attributes (based on the Certificate of Sponsorship, Qualifications and Prospective Earnings) and satisfy the English Language and Maintenance Requirements. For full details on qualifying under Tier 2 General please see http://www.commonwealthcontractors.com/Qualifying_under_Tier_2.html
It is only possible to apply under Tier 2 general if an individual possess a valid Certificate of Sponsorship (CoS). A Certificate of Sponsorship is a unique 10 digit reference number which relates to a database entry on the UK Border Agency’s Sponsor Management System. Once an employer has conducted all necessary Tier 2 employment related activities (e.g. Resident Labour Market Test, met all advertising requirements etc) they can go online and create a Certificate of Sponsorship, the electronic document effectively being a declaration to the UKBA on the status of the application. It is crucial that the employer recruits the individual in the right way and enters information correctly on the Certificate of Sponsorship otherwise a large fine could be handed out by the UKBA at Tier 2 compliance audit time. If you are an employer considering Tier 2 licensing please see http://www.commonwealthcontractors.com/Tier_2_Sponsorship_Licenses.html
Working for a Consultancy
Many skilled professionals find working for a consultancy a great alternative to out and out freelancing as they:
· Get to work on an array of different client facing assignments
· Normally receive outstanding remuneration packages
· Benefit from a supportive head office team who take care of taxation, UK work visas etc
This information has been provided by www.CommonwealthContractors.com in association with OISC Registered Immigration Partners. Commonwealth Contractors partners with a number of ‘A Rated’ Tier 2 Licensed Consultancies who may be prepared, where required to provide Tier 2 (Work Permit) Sponsorship.
Tier 5 (formerly Working Holidaymaker)
Tier 5 Youth Mobility Visas (formerly Working Holidaymaker Visas) are still incredibly popular with those freelancers under the age of 30 from Australia and New Zealand. Many IT professionals in particular choose to come over to the UK for a period of up to two years in order to gain valuable experience of consulting abroad.Tier 5 Youth Mobility Visas allow Australian, Canadian, Japanese and New Zealand nationals to work freely in the UK for a period of up to two years, after which time they must leave the United Kingdom. It is not possible to extend a Tier 5 visa or move to another immigration category in the UK, however, many freelancers from Australia and New Zealand find that they enjoy life in the UK so much that they return home briefly to apply under Tier 1 General (formerly HSMP) or Tier 2 General (formerly UK Work Permit). Those that are considering doing this in the future should ensure that freelance income generated while on a Tier 5 visa qualifies under Tier 1 General, therefore care must be used when deciding upon a suitable billing structure i.e. Contractor Limited Company or Umbrella Company.
What is Tier 5?
Tier 5 is the final tier of the Government’s 5 tier Points Based Immigration System (PBS). It is actually made up of six subcategories (Creative and Sporting, Charity Workers, Religious Workers, Government Authorised Exchange, International Agreement and the Youth Mobility Scheme), however this guide will simply focus on Tier 5 Youth Mobility.
Applying for a Tier 5 Visa
In order to apply under Tier 5 an applicant must submit an application in their country of origin. Applicants score points for Nationality, Age & Maintenance. For more information on the points awarded under Tier 5 Youth Mobility please see http://www.commonwealthcontractors.com/Tier_5_(Working_Holiday)_Visa.html
Moving to Tier 1 or Tier 2
Most freelancers from Australia or New Zealand follow the advice of their contract recruitment agent when deciding upon a suitable vehicle for dealing with freelance income. Many are recommended to use Contractor Limited Companies however these structures can cause problems when applying for a Tier 1 General visa due to the income structuring involved (an artificially low salary is normally set to save tax and then income is taken in a mix of dividends and reimbursed business expenses). Not only this, Dividend income is also not covered by the UK / Australia double tax agreement therefore an individual may be left with a ATO tax liability.
Umbrella Companies are a better way to go however some will not provide suitable payslips or employment references therefore issues can occur. Reimbursed Business expenses are not considered a suitable form of remuneration by the UK Border Agency therefore care must be taken not to be too aggressive with expense claims. For more information please see http://www.commonwealthcontractors.com/Moving_from_a_Tier_5_Visa_to_Tier_1_or_Tier_2.html
This information has been provided by www.CommonwealthContractors.com in association with OISC Registered Immigration Partners. Commonwealth Contractors partners with a number of ‘A Rated’ Tier 2 Licensed Consultancies who may be prepared, where required to provide Tier 2 (Work Permit) Sponsorship.
UK Ancestry Visas
Freelancers with Ancestral ties to the United Kingdom often find themselves in an enviable position as an Ancestry Visa allows the holder to work in the UK for a period of up to 5 years on an unrestricted basis after which time the holder can apply for Permanent Residence (also referred to as Indefinite Leave to Remain).Freelancers working in the UK really don’t need to worry about whether or not to use an Umbrella Company, a Contractor Limited Company or any other structure (so long as it is legal!) as none of them have an effect on a future immigration application.
Qualifying for an Ancestry Visa
In order to qualify for an Ancestry Visa you must be a Commonwealth Citizen (see below) aged 17 or over with either a Grandparent born in the United Kingdom or born in the Republic of Ireland before the 31st March 1922. Applicants must be able and plan to work in the UK and must be able to support themselves and their dependents without requiring access to public funds. Applications must be made in the individuals country of nationality.
On the whole visa processing times take around about a month however applicants are advised to start planning a submission well before their planned date of departure. In particular prospective applicants should ensure that they possess adequate funds in a qualifying account. New Zealanders should note that all visas are processed by the British High Commission in Canberra, therefore extra time should be provided for visa processing.
Commonwealth Citizens from: Antigua and Barbuda, Australia, The Bahamas, Bangladesh, Barbados, Belize, Botswana, Brunei, Cameroon, Canada, Republic of Cyprus, Dominica, Fiji, The Gambia, Ghana, Grenada, Guyana, India, Jamaica, Kenya, Kiribati, Lesotho, Malawi, Malaysia, Maldives, Malta, Mauritius, Mozambique, Nauru, New Zealand, Nigeria, Pakistan, Papua New Guinea, Saint Christopher and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Seychelles, Sierra Leone, Singapore, Solomon Islands, South Africa, Sri Lanka, Swaziland, Tanzania, Tonga, Trinidad and Tobago, Tuvalu, Uganda, Vanuatu, Western Samoa, Zambia, Zimbabwe, Namibia
For more information on Ancestry Visa applications and working as a freelance professional on an temporary work visa such as Tier 1 General or Tier 2 General please see http://www.commonwealthcontractors.com/UK_Ancestry_Visa.html
Freelancing on an Ancestry Visa
Those on Ancestry Visas are normally in a great position to maximise freelance income as there is no need to worry about a future immigration application. It may be possible to claim relocation costs such as flights, shipping etc where a project has been secured from outside the UK and a suitable consulting vehicle has been arranged.
Australians are recommended not to use a Contractor Limited Company due to the fact that dividend income is not covered by the UK / Australia double tax agreement, therefore individuals may find they have an ATO liability.
This information has been provided by www.CommonwealthContractors.com in association with OISC Registered Immigration Partners. Commonwealth Contractors partners with a number of ‘A Rated’ Tier 2 Licensed Consultancies who may be prepared, where required to provide Tier 2 (Work Permit) Sponsorship.
