Self Employed Mortgages!
If Coronavirus hasn't been hard enough for the Self Employed, things are about to get even harder in the mortgage world. As of 1st October 2021, majority of mortgage lenders will require the Self Employed tax returns for the year 2020/2021 as 2019/2020 will then be over 18 months old. The Self Employed have until the end of January to file their returns with HMRC but for mortgage lenders, the latest years will become a must!
The difference this year is the HMRC have insisted that any Self Employed Income Support Scheme grants (SEISS) or Coronavirus Job Retention Scheme (CJRS) payments falling within tax year 2020/2021 must be declared as taxable income on their tax returns. The standard documents mortgage lenders require for Self Employed has always been an SA302 with Tax Year Overview to ensure the tax has been paid and matches the SA302. However going forward this will no longer suffice.
The SA302 summary document remains unchanged and will group together all the income as “income from self employment” including the actual income made from self employment and the grant income. Most mortgage lenders have remained relatively quiet about what this will mean for them, but what we do know is in order for a mortgage lender to see the split, between grant and income, the full tax return (SA100) and supplement page SA103 will be required.
So far the likes of HSBC and Coventry Building Society have already updated their policies to confirm they will be deducting any grant income from the Profit figure and will use the lower figure for mortgage purposes. We have had corfirmkation from Halifax and Kensington they will include the grant income and will continue to use the total Profit figure for mortgage purposes.
Meaning a self employed client could potentially see over £100,000 difference in mortgage lending between the different lenders, making professional mortgage advice more important than ever for the self employed! Speak to your adviser today for further information.
