Being self employed can be challenging at the best of times. You have to wear many hats and keep several plates spinning at the same time. Trying to get a mortgage when you’re self-employed can be even more frustrating.
Not only do you need to show your income stretching over several years (whereas employed applicants may only need to show the last month’s payslip), but the way your income is assessed can vary. Assuming you are a limited company director, you can provide a personal Tax Calculation showing the salary and dividends you’ve paid yourself. Alternatively, you can often provide company accounts showing your salary and your share of the net or retained profit.
For most applicants, a Tax Calculation is produced as a result of your personal declaration to HMRC. That document will cover the year prior ending on the 6th April – meaning that for 2025 applications, you are declaring the income earned through most of 2024 and early 2025.
Further to this, and for reasons that will become evident, you also need to provide the Tax Year Overview, which is HMRC’s receipt confirming the tax has been paid. Lenders use this to verify that the amounts declared to HMRC are actually final and correct. Of course, you don’t get this receipt automatically, you’ll need to log on and download it or ask your accountant. You can read more about tax documents and how they relate to mortgage applications here.
Where this becomes particularly frustrating is that many mortgage lenders generally won’t accept accounts where the end of the period is more than 18 months old. For example, if you apply for a mortgage in October 2025, it’s likely that your last set of fully submitted accounts, along with the corresponding tax payment, probably ended in April 2024.
It’s quite likely that your accountant is still working to a January 2026 deadline, and your assumption is the tax money set aside can carry on making you interest until then also. Unfortunately, that’s not the case. Not only will you need to rush that submission, but because you need to provide the receipt for verification, you also need to pay the HMRC well before the deadline too.
It does seem pretty unfair, especially when you consider that three quarters of business owners believe being self-employed makes it harder to get a mortgage . With rules like this, it’s easy to see why so many find the self-employed mortgage process more complicated!
It’s not all bad news though. There are a good number of lenders that will accept the previous year’s Tax Calculations – including Paragon bank, Keystone and Kensington, among others – who don’t have this 18-month restriction.
Your options will be more limited, and while submitting returns and paying tax 3 months early isn’t ideal, it will result in much better choice in your mortgage options. It can also save significant time in the application process, and given that the end of year is surely a busy time for accountants, they might thank you for getting ahead of the rush!
