Employed by my own LTD Company

gazfocus

Hi all,

A long way off, but next May, I will be looking to get staircase to 100% of my shared ownership house. So, I'm starting now to look into all the possible options and get things in place so that we can show 6 months of solid income and we will hopefully have cleared our debts by end of November, enabling us to have 6 months "debt-free" before applying to remortgage.

However, I'm just wondering how our employment circumstances will be handled.

- I am employed by company 'A' on a full time basis and get a PAYE wage.
- I am the sole director of a ltd company and I work for the company on a part time basis and get a PAYE wage.
- My wife works for my ltd company on a full time basis and gets a PAYE wage.

So, am I 'self employed' or am I 'employed'?

What do I put down on a mortgage application if it asks for the name of my boss? Would I put our accountants name?

Thanks

Gary123456790

Hi,

It depends on the lender but most likely you will be classed as self employed and the wife employed. It will be plain when you both submit paperwork that the wife works for you so this may well make some lenders unhappy.

In their eyes you could print payslips showing anything for both of you so this may well put off a few lenders.

Best to employ the services of a good broker, they will know how to present this to the lender.

It is unlikely they will ask for the name of your boss.

Thanks,

Gary.

gazfocus

Gary123456790 wrote: »

Hi,

It depends on the lender but most likely you will be classed as self employed and the wife employed. It will be plain when you both submit paperwork that the wife works for you so this may well make some lenders unhappy.

In their eyes you could print payslips showing anything for both of you so this may well put off a few lenders.

Best to employ the services of a good broker, they will know how to present this to the lender.

It is unlikely they will ask for the name of your boss.

Thanks,

Gary.

Hi,

Thanks for your post but I don't really agree with some of the things you've said (although would be happy to be proven wrong).

It depends on the lender but most likely you will be classed as self employed and the wife employed. It will be plain when you both submit paperwork that the wife works for you so this may well make some lenders unhappy.

I understand what you're saying here, but my employer will be the LTD company. The LTD company is legally a seperate entity to myself, but being the sole directory, there's not really anyone else that can do an employers reference if one becomes required.

In their eyes you could print payslips showing anything for both of you so this may well put off a few lenders.

We have an accountant that does the payroll and produces the payslips. Additionally, there would be evidence of the wages going into each of our bank accounts.

It is unlikely they will ask for the name of your boss.

When I applied for my mortgage that I have now, I had to get employer references from both of my then part time jobs. These had to include the name of the person doing the reference.

ACG

As the owner of the company - ltd, llp, or sole trader you are still classed as self employed.

Your wifes income may be looked at slightly differently too... (it might not be).

For your ltd company, assuming you are relying on income from it, they may want any combination of the below:
P60,
Payslips,
SA302's (can be obtained through your accountant or HMRC - generally take a week to come).
Company accounts.

Depending on the lender and LTV, they could want anywhere from 1-3 years worth.

chunkychocky

ACG wrote: »

As the owner of the company - ltd, llp, or sole trader you are still classed as self employed.

That is not actually the case. I am employed by my own company as well. I had to have our accountant confirm my wages but otherwise all was fine.

kingstreet

chunkychocky wrote: »

I am employed by my own company as well. I had to have our accountant confirm my wages but otherwise all was fine.

Which is what is normally requested for the self-employed!

A lender treats anyone with more than 25% of the equity in a limited company as self-employed.

That can cover;-

true Schedule D taxpayer (self-employed only)
true Schedule E taxpayer (employed only)
part Schedule E taxpayer (director's remuneration and dividends)

where the lender will typically accept HMRC SA302s in lieu of accounts.

The point is, you don't get to simply submit three months payslips, like a "normal" employee.

gazfocus

Thanks. Is there anything we can do to reduce the potential impact of being classed as 'self employed'?

i.e. would it be better to pay my wife a slightly higher wage and stop paying my own wage, so that only my wife is counting on wages from the ltd company?

or would it be worth getting another directory on board (such as my mum)?

The limited company will have been going for 12 months next month and Novembers company returns will be its first.

chunkychocky

kingstreet wrote: »

Which is what is normally requested for the self-employed!

Not quite. I didn't have to submit the company accounts to the mortgage company, therefore they are oblivious as to whether that income is coming from a profit making or loss making business. They only needed the accountant to confirm that the figures on my pay slips were correct.

amnblog

Hi Gaz

presumably you are doing self assessment tax returns?

Order SA302's for you and your wife from HMRC for the past 3 years.

They contain the information the lenders need.

If you need instructions to get SA302s, PM me and I will send you a link.

One you have the SA302s have a broker look at them and them will tell you where you stand.

gazfocus

amnblog wrote: »

Hi Gaz

presumably you are doing self assessment tax returns?

Order SA302's for you and your wife from HMRC for the past 3 years.

They contain the information the lenders need.

If you need instructions to get SA302s, PM me and I will send you a link.

One you have the SA302s have a broker look at them and them will tell you where you stand.

Hi.

Thanks. The company has only been going for almost 12 months and I've not had to do a self assessment.

kingstreet

chunkychocky wrote: »

Not quite. I didn't have to submit the company accounts to the mortgage company, therefore they are oblivious as to whether that income is coming from a profit making or loss making business. They only needed the accountant to confirm that the figures on my pay slips were correct.

I didn't say anything about submitting accounts.

Mostly, it's now an accountant's certificate or SA302s. It's items in lieu.

I'm forced to generalise because I'm talking about most of the mortgage market. If your specific lender does something differently, that's fine if the OP uses them.