Working through a LTD company - mortgage application?

Will_Eye_Arm

Hello,

My Spouse and I both work through our LTD company. We take a salary from the company of £8000.

Then the rest in dividends after the LTD company has paid expenses and corporation tax.

If we were to apply for a mortgage, how would our income be calculated?

Would they just look at the salary and the dividends?

Or would the pre-tax income of the LTD company be taken into account? If not, would it be better to switch to regular self-employed status and not claim any expenses or pay corporation tax to have a higher income on paper?

Say we both generate £45,000 per year of work through the LTD company but then claim things like working from home allowance, internet connection, accountant, etc as expenses of the LTD company. Then the LTD company pays the corporation tax.

By the time the money reaches us, a big chunk, on paper, would've been eaten up by the LTD company.

So it would appear we earn a lower amount.

Whereas if we were self-employed, we'd both have £45,000 on our tax returns.

We'd probably pay more tax if we were self-employed rather than working through a LTD company. But our income would look higher on paper.

Is this how it works? Or can the same income be reported when working through a LTD company?

Many thanks!

MortgageMamma

For self employed Ltd co directors most mortgage lenders look at salary plus dividend income (sometimes only a percentage of that) as your actual income.


Other lenders will look at your last three years net profit and your share of that net profit for income whether drawn or not.


Some lenders ask for both.

Very much depends on the lender. Get some professional advice.