According to the Office of National Statistics, the number of self-employed in the UK labour market continues to increase, from 3.3 million people (12.0% of the labour force) in 2001, to 4.8 million (15.1% of the labour force) in 2017.
Although being self-employed means that you may not earn a regular amount each month, and your income can rise and fall from month to month or from year to year, it is still possible for lenders to assess your income for mortgage purposes.
Self-certification of income no longer exists; your income from your self-employment will need to verified by using the following documents:
- Annual accounts completed by a qualified Accountant, plus
- Tax calculation or Tax Year Overview downloaded from the HMRC website.
Finding your Tax Calculation
There has been a change to the procedure in requesting your Tax Calculation and Tax Year Overviews from HMRC from Monday 4th September 2017. The new procedure is to log into your HMRC online account to access your “self-serve” Tax Calculation and Tax Year Overviews. These can be accessed using the website https://www.gov.uk/sa302-tax-calculation.
Alternatively if you use an Accountant, they can obtain these on your behalf.
NB: There is a list on the HMRC website of the mortgage providers and lenders who currently accept these “self-serve” documents.
Some smaller or specialist lenders are not currently accepting them and require alternative documentation to verify self-employed income.
What lenders need to see
Although many lenders ask for information about your accounts for the last three years, there are mortgage products available to self-employed applicants with only one year’s worth of accounts (your Accountant may be asked to provide a projected income figure).
The figure that lenders usually work on for mortgage affordability is the net income figure rather than the gross figure, and as with employed applicants, lenders may want to know details about your spending which can be verified from your bank statements.
It is also possible for self-employed applicants to obtain Accident & Sickness Cover, Life Assurance and Income Protection insurance.
Talk to us about your mortgage options
If you’re self employed, get in touch and we can show you more options and help you with your application for a mortgage.Contact us to discuss mortgages for self employed