Self Employed Applicants
All self employed cases are currently being referred to underwriters for manual assessment. Please refer to Coronavirus / COVID-19 section for full details. We consider:
- Net profit for Sole Traders
- Share of net profit for Partnerships
- Salary & dividends for Directors of Limited companies
We require 2 years’ income documentation for self employed applicants.
Where 2 years income has not been captured for affordability cases will automatically be declined.
Affordability for self employed applicants is based on an average of the last 2 years self employed income, where the self employed income has increased in the latest year, or the latest year’s self employed income where this has decreased in the latest year.
Where self employed income has been captured the maximum loan to income will be 4.25 times income and the maximum loan to value will be 90%.
If the applicant has been self employed for less than 2 years, please enter '0' into the income fields.
If any of the following criteria apply, the client must be keyed as self-employed.
- Where the applicant has a shareholding of 25% or more
- If joint clients own 25% or more between them, treat both clients as self-employed (both applicants need to hold a % share)
- A sub-contractor who derives income from more than one contract
- An applicant has a partnership interest in a business, i.e. income is not PAYE, irrespective of the percentage shareholding
- An applicant owns a franchise
- An applicant employed by a Private Limited Company (LTD) or Limited Liability Partnership (LLP) who receives a salary (PAYE) and dividends as part of their remuneration package and / or Net Profits
For full information on the different types of income accepted for self-employed applicants please see income section.
Acceptable Income Verification Documents
The year end on all documentation must be the most recent and must not be dated more than 18 months before the date of application.
Latest 2 years Tax Calculations and latest 2 years corresponding Tax Year Overviews - TSB accept Tax Calculations in the following formats:
- HMRC Online Tax Calculations
- Tax Calculations produced using Commercial Software
In all instances the latest 2 years Tax Calculations (regardless of format) must be accompanied by the corresponding latest 2 years Tax Year Overviews.
All versions of Tax Calculations and Tax Year Overviews must contain:
- All pages of the documents
- Customers name (surname and initial)
- The unique tax reference number
- The tax year
In addition to the above validation requirements, the following information must also be contained in the relevant document:
- SA302's: must be on headed paper
- HMRC Online Tax Calculation: must contain the HMRC logo and show the status bar confirming 100% complete
- Tax Year Overview: must contain the HMRC logo, the amount of tax due and the statement - "This is a copy of the information held on your official online self-assessment tax account with the HMRC" (for online versions only).
TSB will always request the latest 2 years Tax Calculations with latest 2 years corresponding Tax Year Overviews as the preferred method of self-employed income verification and must be provided as evidence where applicable.
The website - gov.uk/sa302-tax-calculation contains information on how the documents can be obtained. Alternatively customers who are registered can follow these steps:
To obtain HMRC Online Tax Calculations:
1. Log into the HMRC online account (go to online.hmrc.gov.uk/login)
2. Select ‘Self Assessment (registered customers will be automatically be directed to this screen)
3. Follow the link ‘View Your Tax Return’
4. Follow the link ‘tax return options’.
5. Choose the year from the drop down menu and select the ‘Go’ button
6. Select ‘view return’ button
7. Follow the link ‘view calculation’
8. Follow the link ‘view and print your calculation’
9. Follow the link at the bottom of the page to 'print your full calculation'
To obtain Tax Year Overviews:
1. Log into the HMRC online account (go to online.hmrc.gov.uk)
2. Select ‘Self Assessment’ (registered customers will automatically be directed to this screen)
3. Follow the link ‘Self Assessment Overview’
4. Follow the link ‘view account’
5. Follow the link ‘tax years’
6. Choose the year from the drop down menu and select the ‘Go’ button
7. Follow the link ‘print your Tax Year Overview’.
Repeat steps 5 – 6 for any earlier years.
Accountants Reference – The reference must be fully completed with all required information provided. It must be signed & dated by a suitably qualified Accountant and must also have either a practice stamp, or be accompanied by a sheet of the company’s headed paper.
Latest 2 Years Full Accounts – must be finalised, signed by the accountant and clearly show the net profit (for Sole Traders), share of net profit (for Partnerships) or salary & dividends (for Directors of Limited companies). Profit & Loss statements alone are not acceptable.