Nationwide Mortgage - Accountants Certificate

jason.parker.86

Hello,
Just filling out my application form for Nationwide and its asking for income.
Main income is fine, its PAYE- and have P60 + payslips.
Second income is from my Limited Company which has been trading since 2010. They say they will get an "accountants certificate" for the accountants to complete. While they do that, any idea on what figure I can enter in the box to see how much they will lend me.
Net / Gross Profit? According to the Mortgage advisor, she wouldn't go into detail but said sometimes you can put the figure on a salary you COULD draw if the funds are available.?
Any help or advice would be well received.
Thank you.

Thrugelmir

How do you remunerate youself from the Company?

Payroll or dividends?

jason.parker.86

Last two years, I have had "Goodwill" paid to me after I rolled from a "Self Employed" to "Limited". This Goodwill was enough to last me until now.
I had a few dividends paid out also- but we are only talking £11,000. Company's net profits was approx £45,000 both years.

kingstreet

If it's a source of self-employed earnings, you enter net profit.

If it's dividends, it's entered in the gross annual salary box with income from employment.

From Nationwide's lending criteria;-

Self Employed

Sole traders and partnerships - use the lower of the applicant's last 12 months net profit figure, or the average of the last 2 years net profit figure, as confirmed by the Accountant's Certificates.

Directors of limited companies with more than 20% shareholding - use the lower of the last 12 months of the relevant director's remuneration and any share of dividends quoted, or the average of the last 2 years, as confirmed in the Accountant's Certificate. Treat remuneration and dividends as gross for tax purposes.

Alternatively, we can accept confirmation of income from HMRC, covering a 2 year period, in the form of a letter confirming the net profit, an official stamped Self Assessment (SA302) tax return, or an online SA302 (OUID) printed by the tax office and accompanied by covering letter from HMRC.

Please note: Accounts must be Final Accounts (drafts and projections are not acceptable) and the end of the latest financial period must not be more than 18 months ago. Also the minimum acceptable trading period is 2 years.

Accountant's Certificates

We will request an Accountant's Certificate for confirmation of income for self employed applicants. The certificate must be in our format and will be applied for by us, please supply the accountant's name and fax number.

From 1 December 2011, all Accountant's Certificates must be prepared and signed by a professionally qualified Associate or Fellow of one of the following bodies:

The Institute of Chartered Accountants (ACA/FCA)
The Association of Chartered Certified Accountants (ACCA/FCCA)
The Chartered Institute of Management Accountants (CIMA)
The Chartered Institute of Public Finance Accountancy (CIPFA)
The Association of Authorised Public Accountants (AAPA)
The Association of International Accountants (AIA)
The Chartered Institute of Taxation and Association of Taxation Technicians (CIOT/ATT)
The Institute of Chartered Accountants of Scotland (ICAS)
Chartered Accountants Ireland (CAI)
Association of Accounting Technicians (AAT)
Institute of Financial Accountants (IFA)
Institute of Certified Public Accountants (ICPA)

If the accountant does not have one of the above qualifications then the Accountant's Certificate cannot be accepted and the corresponding years SA302 tax assessments issued by HMRC must be used instead.

jason.parker.86

Thank you for above.
Reading from that- director's remuneration. What does that entale?

kingstreet

Using the lower figure on the Accountant's Certificate of;-

last twelve months
or
average over last two years.

jason.parker.86

kingstreet wrote: »

Using the lower figure on the Accountant's Certificate of;-

last twelve months
or
average over last two years.

Sorry to ask such a silly question, but would accountants certificate take into account "earnings not taken" i.e profit retained with my company.
J

Thrugelmir

jason.parker.86 wrote: »

Sorry to ask such a silly question, but would accountants certificate take into account "earnings not taken" i.e profit retained with my company.
J

Presumably not drawn due to tax reasons?

kingstreet

The Accountants' Certificate is sent directly to the accountant by Nationwide and we aren't privy to what is requested.

I suggest you ask Nationwide if you want confirmation of what will be requested and/or accepted.

jason.parker.86

Thrugelmir wrote: »

Presumably not drawn due to tax reasons?

Yes- however Nationwide said on the phone they can include dividends I "could" draw.

jason.parker.86

jason.parker.86 wrote: »

Yes- however Nationwide said on the phone they can include dividends I "could" draw.

Does anyone have any experience with the above?