Director of a company, best route to get mortgage

Cliveman_Pieman

rjwr wrote: »

i disagree with this. The affect of claiming back after the initial glory period of claiming back large quantities of VAT severely outweighs the short term benefit of registering for VAT below the threshold.

I agree with your point that very few but some businesses might benefit from the perception of being larger, however the goal here is to surely increase turnover

I have at least a dozen clients that voluntarily VAT register. You don't know what the OP is selling. What if it's zero rated items? He would be a fool not to voluntarily register if that were the case.

The_Real_Cheddar_Bob

Cliveman_Pieman wrote: »

I have at least a dozen clients that voluntarily VAT register. You don't know what the OP is selling. What if it's zero rated items? He would be a fool not to voluntarily register if that were the case.

Thats a good answer and yes i agree with this. I am aware of zero vat items but clearly not to the extent you seem to be,

It seems unlikely the OP is selling zero vat items, it would have been mentioned before now,

pleasedelete

To get mortgage you have to provide 2 or 3 year proof of income by providing your HMRC SA302 tax calculation- you can access this through your personal online tax account . This shows your total income and the tax that you have paid and that is used as the basis for calculating the amount that you can borrow. The company income has no relevance as you are getting a mortgage and not the company.

katebl

Surely after 5 years if you can't even pay yourself minimum wage your business isn't viable - at least on paper? Isn't this sort of thing supposed to be investigated?

csgohan4

I hope OP gets what they deserve, good luck

AdrianC

Cliveman_Pieman wrote: »

I have at least a dozen clients that voluntarily VAT register. You don't know what the OP is selling. What if it's zero rated items? He would be a fool not to voluntarily register if that were the case.

...or if their customers were all VAT registered businesses, so there's no cost implication to them.

I don't see a great issue with the OP's situation, as he describes it.

socialchaos wrote:

Hi guys

Im a director of a ltd company and Im wondering how best to go about getting a mortgage.

My current situation is that I pay myself a salary below the tax threshold and less than minimum wage. This gets topped up by tax credits (WC & CT) and housing benefits. I on occasion also take out directors loans and repay the business.

I have an excellent credit rating with healthy monthly repayments being paid on credit cards and a 10k personal loan which I have loaned to the business.

Just wondering how best to go about applying for a mortgage. I know some directors use some kind of a loophole where they pay all of the benefits into the business (Directors loan in) and then pay themselves the whole amount as a salary, though this may well attract some tax. This option may be inefficient, considering I need benefits to you know, live and stuff.

Otherwise if I were to go to my bank, nationwide, surely they may refuse because I i'm in receipt of benefits?

Also taking my income into consideration would I still be eligible for help from the government towards deposit? helptobuy etc.

This may seem a little far fetched but it makes sense to buy if I can. House prices in my area are £750+ but mortgages are £480 per month which is much more affordable.

Thank you in advance

He is taking a minimum salary from the business. The rest of the business's profit is remaining in the business - it's not his money. That money is available to the business for reinvestment and growth.

If he takes a loan from the business, that loan needs to be repaid or converted to (taxable) income. There's no mention of taking any income via dividends - but these would be taxable anyway. In fact, he actually states that there's only recently been a profit after years of establishing the business and making losses - no dividends can be paid if no profit has been made.

OP - your problem in getting a mortgage will not be because you're in receipt of benefits, but because you only have a small income... The answer is simple. Make more income...

AdrianC

katebl wrote: »

Surely after 5 years if you can't even pay yourself minimum wage your business isn't viable - at least on paper? Isn't this sort of thing supposed to be investigated?

The minimum wage does not apply to company directors.

MobileSaver

Cliveman_Pieman wrote: »

I have at least a dozen clients that voluntarily VAT register.

+1

There are lots of different (perfectly legal and financially sound) reasons why voluntarily registering for VAT is a good idea.

katebl wrote: »

if you can't even pay yourself minimum wage your business isn't viable - at least on paper? Isn't this sort of thing supposed to be investigated?

Investigated by who and for what?!??! Have you ever heard of an online company called Amazon? It took Amazon 9 years of trading before they made an annual profit...

katebl

AdrianC wrote: »

The minimum wage does not apply to company directors.

I though it was relevant where tax credits are claimed though, due to low wages?

katebl

MobileSaver wrote: »

Investigated by who and for what?!??! Have you ever heard of an online company called Amazon? It took Amazon 9 years of trading before they made an annual profit...

Pretty sure Amazon weren't claiming tax credits though... not exactly a comparable so not sure why you seem so incredulous about it