Appendix FM Financial Requirement: Variable Income From Non-Salaried Employment
Following previous posts about meeting the financial requirement of Appendix FM of the Immigration Rules through cash savings and through self-employment, this post will focus on meeting the income requirement through employment – specifically through variable income from non-salaried employment.
The Immigration Rules set out the general financial requirement of a gross annual income of at least £29,000. There is no longer a separate child element to the minimum income requirement.
When an Applicant (if they are in the UK with permission to work) or Sponsor receives a fixed gross annual salary, usually subject to a contractual minimum number of hours to be worked, paid directly into a personal bank account on a monthly or weekly basis, preparing an Appendix FM application and providing the requisite specified evidence is relatively straightforward. However, when income is derived from non-salaried employment and the income varies according to the number of hours worked or varying hourly or other rates, or where pay is commissioned-based, evidencing the financial requirement may be more complex.
The relevant category for those relying upon their variable income will depend on the length of time spent in their employment at the date of application, with Category A applicable to those who have been in non-salaried employment for at least 6 months and Category B for those whose employment is less than 6 months.
Category A – Non-Salaried Employment for at Least 6 Months
Category A is the relevant route for an Applicant and/or Sponsor who has been in non-salaried employment for at least six months.
The only difference between Category A for salaried and non-salaried employment is the method used to calculate the gross annual income. Salaried employment relies on the lowest level of annual salary received during the 6 month period prior to the date of application, showing that it equals or exceeds the financial requirement. For non-salaried employment an annualised average is calculated, using the six months of income received prior to the date of application as follows:
(Total gross income from employment held throughout the 6 month period)
divided by 6 and multiplied by 12 = income from non-salaried employment
For example, if a Sponsor receives £2,500 for 4 months and £3,000 for 2 months of the 6 month period prior to application, then the Sponsor’s gross non-employment income for the last six months is £16,000. This figure is then divided by six and multiplied by 12 to give the level of annual income towards meeting the financial requirement, in this example the amount is £32,000.
Please note the Home Office Guidance example shows that where the income is received on a weekly basis the total income over a 26 week period (equivalent to 6 months) should be calculated before being divided by 6 and multiplied by 12 to reach an annualised income from non-salaried employment.
Therefore it is important when preparing an application to keep track of income received over the 6 month period to ensure it does not fall below the requisite amount. The nature of variable income can be both advantageous and disadvantageous, as it may be the case that an annualised income can exceed the financial requirement through additional hours and/or overtime, if the option is available, but it is also a risk where there may not be a guaranteed number of hours and therefore a risk that a drop in income will take you below the threshold.
Where there is a risk that the annualised income from non-salaried employment may fall below the threshold, you may be able to combine the income with your partner’s employment income, cash savings held above £16,000, specified non-employment income (such as rental income), or any annual pension income as outlined in this previous blog post.
Please note that if the Applicant (if they are in the UK with permission to work) seeks to combine their non-salaried employment income with their partner’s employment income in order to meet the financial requirement, both employment incomes must be calculated under either Category A or Category B. It is not possible to use a combination of Category A and Category B to meet the financial requirement.
Category B – Non-Salaried Employment for Less Than 6 Months
Category B can be used when the Applicant (if they are in the UK with permission to work) or Sponsor has been in non-salaried employment for less than six months. In this respect, the calculation is conducted in two stages:
The first stage is to calculate the gross annual income at the date of application which must meet or exceed the level of income required by the Immigration Rules.
In order to calculate the gross annual income at the date of application, the same calculation outlined above will be used: total income received within the last six months, divided by 6 and multiplied by 12.
If this amount is less than the £29,000 level required then the Applicant/Sponsor can add the gross amount of any specified non-employment income (for example income from property, stocks or interest from shares), the gross annual income from any state or private pension, or cash savings above £16,000 as above.
The second stage involves calculating the total amount of non-salaried employment income received in the 12 months prior to the date of application. This amount must also meet or exceed the level of income required by the Immigration Rules. For example if £10,000 was received in the last 6 months, then you must have earned £19,000 in a previous role in the 6 months before.
If after the second stage the financial requirement is still not met, then income may be combined from any specified non-employment income or income from any state or private pension. However, cash savings cannot be combined in order to meet the financial requirement.
Category B – Less Than 6 Months and Overseas Sponsor Is Returning to the UK
If the Sponsor is returning to the UK with the Applicant in order to work they do not have to be in employment at the date of application in order to meet the requirements of Category B.
In this scenario, the Sponsor will need to have a confirmed offer of employment (salaried or non-salaried) to start within 3 months of the date of their return. The salaried income (or non-salaried annualised income) must meet or exceed £29,000 financial requirement alone or in combination with non-employment income, cash savings or pension income.
In addition, over the 12 months before the date of application the Sponsor must have met the financial requirement through salaried/non-salaried income or through the Applicant and/or Sponsor’s non-employment income or pension income.
In this scenario you will need to provide evidence from your prospective employer or a signed contract of employment.
What Payments Can Be Relied Upon for Non-Salaried Employment?
In addition to the income received from non-salaried employment based on number of hours worked, number of jobs completed, or any items of work invoiced, the Home Office Guidance confirms that you can also rely upon any earnings from overtime, payments to cover travel time, commission-based pay and bonuses (which can include tips and gratuities paid via a tronc scheme registered with HMRC). All overtime worked will be calculated using the above annualised average calculation and will be added to the level of the gross annual salary/annualised non-salaried income. The same approach is used to create an annualised income from commission-based pay. Please note that you cannot rely on any future earnings from overtime, commission-based pay or bonuses. The one exception is in the scenario of a Sponsor returning to the UK with an offer of employment where their gross ‘on-target’ earnings which may be expected from satisfactory performance in the standard or core hours can be included. This must be evidenced in the employer letter or contract of employment provided in support of the application.
Contact Our Immigration Barristers
For more information on the financial requirement under the Immigration Rules, or to discuss an application under Appendix FM of the Immigration Rules then please contact our specialist immigration barristers on 0203 617 9173 or via the enquiry form below.
