why is it Net profit an not gross profit for self employed

thisisthecount

why is it Net profit and not gross profit for self employed? I find this is the case for self cert mortgages. the thing is, if you are going for a mortgage and you are employed, its your full salary they look at before being taxed! bit for self employed, its after the tax I guess?

am I wrong here? have I missed something - just feels unfair.

Comyface

The gross profit is before you have paid your overheads, running costs etc., which employed people don't have. The net profit is therefore closer to the gross annual salary of employed people as it's taxable profit before tax is paid.

I think!

koexelek

Swings and roundabouts for the self employed.
Obviously, you want to deduct as much as you can from your gross profit ( as the net figure is the one you pay tax on), but you need a reasonably high net profit to get a decent income multiple on a mortgage.

thisisthecount

thanks, that makes sense now.