can I declare Dividends in Advance for Mortgage?

fabrykanickow

Hi All,

I’m writing with a question, as there is nowhere I can get the answer.
I’m interested in a First Time Buyer Mortgage and I’m a director of my own company for the last 4 years.

I have made an Annual Accounts for 2016 already, and it’s showing not so much dividends to take.
Now to be able to take right mortgage I have to declare right salary from company, self employment and dividends and show it on the Self Assessment.
Can I declare dividends in advance for the end of companys year 2017 when it comes to personal Self Assesment for 2016/17?
How would the banks look at this situation?

I would be grateful for any answers.

Thank you!

ACG

If you get the right lender, you will be fine.
Not all lenders like dividends as a deposit, some lenders may want an accountants letter and some wont be bothered.

fabrykanickow

So Dividends in Advance on Annual Return shouldn't be a problem for some lenders?

Thank you

amnblog

The point is that, depending on the Lender, you do not need to declare a dividend to obtain a mortgage (provided the business is profitable).

I always tell borrowers not to make decisions about their business based on what they think will get them a mortgage. If it is right for you and your business to declare a dividend for 2016/2017 then by all means do so.

Engage a good broker for guidance.

ACG

I am assuming you mean something along the lines of your accounts run Jan to December, you have not done the accounts for December 2017 yet but you have been taking money from the account which your accountant will tidy up at the end of the year?

As an example, lets say I pay myself £2k a month but my payslips show £1k a month. At the end of the tax year my accountant puts down that I earnt £12k a year PAYE and £12k in dividends. So by november I have paid myself £11k in dividends before the accounts have been finalised, but then in December it all gets sorted..is that the sort of thing you mean?

fabrykanickow

ACG I havent started with Self Assestment for year 2017/18(Apr-Mar). I have made Self assestment for 2015/16 with as much dividents I could take in advance from company for the companys year ending in oct 2015 (as the dividents taxation was lower in 2016 than in 2017).

Now I have to do Self Assestment for year 2016/17.

Because I have taken as much as I could in dividents in the year 2015/16 now I don't have so much of dividends to take for the companys year ending in oct 2016. To be able to declare certain amout on Self Assestment 2016/17 I have to add once again advanced dividents from the companys year ending in oct 2017 (or add profit from Self Employment, which I don't want to do as the tax is different to dividents tax).

The question is how the lenders look at the Self Assestment showing advanced dividents?

I'm worried that if they want to compare finished Self Assestments with finished Companies Accounts (2017 is not finished yet) they will say that there is no proof that I could get this dividents and the overall income...

I hope that the above is clear

Thank you!

fabrykanickow

amnblog this is interesting...
Could you please tell me what I will need to provide (assuming that most of the time I'm doing the same as most of the companys directors - taking basic sallary and than topup with dividents) if declaring dividents is not necessary for taking personal morgage, and only Companys profit counts?

Thank you

amnblog

You need a profitable business, a decent accountant, and a decent mortgage broker.

No more.

fabrykanickow

what about SA302 that all of the lenders require?...If this is not showing certain profit because I haven't inclouded dividents

amnblog

1. All of the Lenders do not require SA302's.

2. No dividend paid and no dividend showing on an SA302 does not mean that the business is not profitable.

fabrykanickow

Will the conditions ,under which the motgage is given (interest rate, motgage period etc.), be different if SA302 won't be taken so much into consideration (by these landers that don't require SA302) but the company profits will?