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  • FIRST POST
    • rachelleigh73
    • By rachelleigh73 16th May 17, 8:23 PM
    • 27Posts
    • 12Thanks
    rachelleigh73
    SA302 - declaring self-employed earnings to mortgage lender
    • #1
    • 16th May 17, 8:23 PM
    SA302 - declaring self-employed earnings to mortgage lender 16th May 17 at 8:23 PM
    Hi all

    I am in the process of putting my first year of self employment into a tax return. The tax return will be used to produce form SA302 which will be used to support my first ever mortgage application.

    Am I right in thinking that I shouldn't try to minimise my tax liability on this return? Does it make a difference to the amount a mortgage lender will allow me to borrow?

    With thanks in advance 😊

    Rachel
Page 1
    • ACG
    • By ACG 16th May 17, 8:33 PM
    • 15,071 Posts
    • 7,615 Thanks
    ACG
    • #2
    • 16th May 17, 8:33 PM
    • #2
    • 16th May 17, 8:33 PM
    Are you a sole trader or limited company?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • amnblog
    • By amnblog 16th May 17, 9:36 PM
    • 9,562 Posts
    • 3,691 Thanks
    amnblog
    • #3
    • 16th May 17, 9:36 PM
    • #3
    • 16th May 17, 9:36 PM
    As a sole trader your profit is listed on your SA302 as your self employed income. That is the figure lenders use for affordability. Therefore you are right that lower profit is lower tax, but less lending potential.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • anselld
    • By anselld 16th May 17, 11:19 PM
    • 5,216 Posts
    • 4,756 Thanks
    anselld
    • #4
    • 16th May 17, 11:19 PM
    • #4
    • 16th May 17, 11:19 PM
    Am I right in thinking that I shouldn't try to minimise my tax liability on this return? Does it make a difference to the amount a mortgage lender will allow me to borrow?
    Originally posted by rachelleigh73
    You are right in thinking you should fill in the form truthfully based on the facts. There is no way to "minimise tax liability" other than being dishonest.
    • rachelleigh73
    • By rachelleigh73 16th May 17, 11:43 PM
    • 27 Posts
    • 12 Thanks
    rachelleigh73
    • #5
    • 16th May 17, 11:43 PM
    • #5
    • 16th May 17, 11:43 PM
    Thanks for the replies - much appreciated ��

    ACG - I'm a sole trader.

    Anselld - not dishonest - just looking to make an informed decision.
    • David White
    • By David White 17th May 17, 8:48 AM
    • 811 Posts
    • 346 Thanks
    David White
    • #6
    • 17th May 17, 8:48 AM
    • #6
    • 17th May 17, 8:48 AM
    You are right in thinking you should fill in the form truthfully based on the facts. There is no way to "minimise tax liability" other than being dishonest.
    Originally posted by anselld
    Total nonsense.
    I am a Mortgage Broker
    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.
    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • ACG
    • By ACG 17th May 17, 9:49 AM
    • 15,071 Posts
    • 7,615 Thanks
    ACG
    • #7
    • 17th May 17, 9:49 AM
    • #7
    • 17th May 17, 9:49 AM
    Then what amn says is spot on.

    I agree with David, it is nonsense.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • amnblog
    • By amnblog 17th May 17, 11:34 AM
    • 9,562 Posts
    • 3,691 Thanks
    amnblog
    • #8
    • 17th May 17, 11:34 AM
    • #8
    • 17th May 17, 11:34 AM
    This is fun! - I agree with ACG and David
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • First time buyer lauren
    • By First time buyer lauren 17th May 17, 7:39 PM
    • 12 Posts
    • 3 Thanks
    First time buyer lauren
    • #9
    • 17th May 17, 7:39 PM
    • #9
    • 17th May 17, 7:39 PM
    We have literally just today been accepted for our first mortgage (subject to valuation) we went with Santander through a MA because they only went off the past years earnings, my partner is self employed and I have been keeping his books. I completely disagree with the "dishonest" comment, we maximised ours by not claiming for everything that we could have claimed for when doing the tax return, the only people that have been done out of money is ourselves as we now have a rather huge tax bill to pay by january (not unaffordable by any means though which is something you need to keep in mind).
    • Thrugelmir
    • By Thrugelmir 17th May 17, 9:53 PM
    • 54,384 Posts
    • 47,199 Thanks
    Thrugelmir
    Am I right in thinking that I shouldn't try to minimise my tax liability on this return?
    Originally posted by rachelleigh73
    By what means? Be more specific.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • Typhoon2000
    • By Typhoon2000 17th May 17, 11:29 PM
    • 744 Posts
    • 321 Thanks
    Typhoon2000
    By what means? Be more specific.
    Originally posted by Thrugelmir
    I guess he means if he puts down the 20k expense he incurred for buying new machinery for his business on his tax return, his profit will be right down and he will pay less tax.
    If he doesn't he will pay more tax but as profit is higher, but he will be able to get a bigger mortgage.
    • Thrugelmir
    • By Thrugelmir 17th May 17, 11:54 PM
    • 54,384 Posts
    • 47,199 Thanks
    Thrugelmir
    I guess he means if he puts down the 20k expense he incurred for buying new machinery for his business on his tax return, his profit will be right down and he will pay less tax.
    Originally posted by Typhoon2000
    Purchase of a capital item is not an expense. Depreciation is. Depreciation isn't tax deductible when it comes to ascertaining taxable profit. Whereas depending on the nature of the capital there will be a deduction from taxable profit. Hence why I asked the question originally.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • anselld
    • By anselld 20th May 17, 6:25 AM
    • 5,216 Posts
    • 4,756 Thanks
    anselld
    We have literally just today been accepted for our first mortgage (subject to valuation) we went with Santander through a MA because they only went off the past years earnings, my partner is self employed and I have been keeping his books. I completely disagree with the "dishonest" comment, we maximised ours by not claiming for everything that we could have claimed for when doing the tax return, the only people that have been done out of money is ourselves as we now have a rather huge tax bill to pay by january (not unaffordable by any means though which is something you need to keep in mind).
    Originally posted by First time buyer lauren
    Artificially inflating your income with a view to obtaining a higher mortgage is still dishonest in my view. The mortgage advisers may disagree in private when the regulators are not listening.
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