natwest requiring to verify income from hmrc

Daisylicious

Hello. .I am in need of some advice. myself and my husband applied for a mortgage via a broker to natwest. process has been extremely slow but we finally got our valuation done last week and everything seems fine. I spoke to natwest a on Saturday and there was no cause for concern. on Monday morning I got a call from my broker advising that natwest now wants to see our upto date bank statement again and also our wage slip. they also sent a letter for us to sign so they can verify income from hmrc. we have already sent the statement and wage slip but we are a bit worried about how much our umbrella company has declared as our income (we get paid by umbrella company in order to up our pay but we also found out that umbrella declares less money to hmrc )...my question is what will happen if the total of our payslips doesn't match up with what the umbrella company has declared to hmrc...would the application be automatically declined? or should we simply work away from natwest and try another lender?

Wales1783

Not sure how Natwest would view it, but I would be more concerned about HMRC finding out that you are being paid more than what has been declared to them

Annisele

If NatWest thinks you're trying to defraud it (by declaring more income than you actually have) then it might make a report to National Hunter. Other lenders would see that report, and it would make it more difficult to borrow elsewhere.

I think you should prioritise sorting out the position with the umbrella company. Is it possible that you're mistaken, and actually everything has been declared properly to HMRC? If not, go find yourselves an accountant (not one associated with the umbrella) and sort it out.

System

It's not one of these umbrella companies that pay you everything above the personal allowance as a 'loan' that doesn't require repayment is it?

HappyMJ

Daisylicious wrote: »

Hello. .I am in need of some advice. myself and my husband applied for a mortgage via a broker to natwest. process has been extremely slow but we finally got our valuation done last week and everything seems fine. I spoke to natwest a on Saturday and there was no cause for concern. on Monday morning I got a call from my broker advising that natwest now wants to see our upto date bank statement again and also our wage slip. they also sent a letter for us to sign so they can verify income from hmrc. we have already sent the statement and wage slip but we are a bit worried about how much our umbrella company has declared as our income (we get paid by umbrella company in order to up our pay but we also found out that umbrella declares less money to hmrc )...my question is what will happen if the total of our payslips doesn't match up with what the umbrella company has declared to hmrc...would the application be automatically declined? or should we simply work away from natwest and try another lender?

Umbrella companies pay you expenses in your payment without the deduction of tax or NI. Those expense payments are not your income. The umbrella company will declare only what's left after expenses have been paid to you.

i.e A day rate of £200 a day and paid every 4 weeks being a gross rate of £4,000 might end up being...

Subsistence and Travel expenses including employers NI and the umbrella company commission £2,000 you get around £1,800 of that.
Salary £2,000 and you get £1,600 after income tax and NI.

Your bank account will show a credit of £3,400.

Your salary isn't £52,000...it's £24,000. You need a specialist mortgage broker who can find a lender willing to lend based on your contract rate.

Daisylicious

thanks all...@happymj..thank you. u seems to understand my concern more...as we already have problem with one of the wage slip ...as income should be 16.50 per hour but they put it as 7 pounds per hour...even one of our old p60 said income for the year was 12k when income shoukd have been around 33k...guess we have to leave it..and probably change back to Paye directly from the agency

HappyMJ

Daisylicious wrote: »

thanks all...@happymj..thank you. u seems to understand my concern more...as we already have problem with one of the wage slip ...as income should be 16.50 per hour but they put it as 7 pounds per hour...even one of our old p60 said income for the year was 12k when income shoukd have been around 33k...guess we have to leave it..and probably change back to Paye directly from the agency

Don't go PAYE for the sake of a mortgage.

£16.50 an hour....set up your own limited company and keep more money for yourself. Going PAYE will cost you a lot in tax and NI and there's no point paying thousands in tax and NI to be able to buy a house. You can get to keep most of your contract rate and borrow you just need specialist advice.

I set up a limited company and saved a fortune especially charging clients VAT and using the VAT flat rate scheme. I get to keep for myself almost 100% of the charged out rate. A limited company can also employ your partner part time to do work for the company. Maybe your partner can seek out new contracts and chase payments for you whilst you are out earning £16.50 an hour.

You will need a mortgage broker who knows the lenders who will lend based on your £16.50 contract rate.

Biggest difference between umbrella and Ltd. is umbrella companies have dispensations not requiring you to produce a receipt to prove exactly what you spent on meals. You can claim a fixed amount whether you really spent it or not. A Ltd. company you must have receipts for all of your meals.

Daisylicious

thank you so much happymj...just a quick question..so if I set up a limited company for myself. would setting up my limited company means I become self employed and pay my taxes myself? would I need to supply and accountants statement of earning to be able to apply for a mortgage...BTW my umbrella company won't process meal expenses without a receipt...

Thrugelmir

Daisylicious wrote: »

.BTW my umbrella company won't process meal expenses without a receipt...

And so they shouldn't. There was a period when umbrella companies (and employment agencies) were using notional deductions to reduce the tax paid by contractors (and temps). (The benefit to employment agencies being the saving in employers NIC).

Evidencing expenditure is always advisable when dealing with the HMRC. Saves an awful lot of hassle.

p00hsticks

Daisylicious wrote: »

thank you so much happymj...just a quick question..so if I set up a limited company for myself. would setting up my limited company means I become self employed and pay my taxes myself? would I need to supply and accountants statement of earning to be able to apply for a mortgage...BTW my umbrella company won't process meal expenses without a receipt...

It's been a while since I did this but in my recollection...

You will be a director, shareholder and employee of oyur company. As an employee, you can draw a regular salary, and use a payroll company to handle the tax and NI deductinos and payments to HMRC (an accoutant can provide this service for you). As director, you can also decide to award your shareholder (also you) dividends from any profit remaining in the comany afte corporation tax has been paid).

But I think this may not be the short-term answer for you, as I thought that morgage companies would normally ask to see at least two years company accounts ....