Low net profit but trying to buy first house?!

AKDea

I have been self employed for 2 years and a few months (April 2020 will be when I hand my third set of books into my accountant).

Last tax year (2018-2019), my invoiced income was £25,000 but my accountant has taken off so much in expenses (stuff that I really don't use for work) and that has significantly bought down my net profit to just £7500! Is this going to seriously hinder me and my partner from getting our first mortgage? (his employed salary is £21,000). My first years trading's net profit was only £1000 after expenses as I only went self employed in the last few months of that tax year.

Help

Edi81

Yes you will be impacted.
You can’t use expenses to reduce your taxable profit and then expect to get a mortgage on a larger amount.
One for a broker but keep this in mind for the next set of accounts.

csgohan4

generally you can only borrow x4.5 of what you earn gross, some lenders go off your company's profits if you are a limited company.


Putting aside your accountant maybe committing fraud and claiming for this things which are not solely used for work, you can't have low tax and high income in your case

ACG

I love that you are openly admitting tax evasion (the illegal one) and complaining about it.

Tell your accountant he has done your accounts wrong, get them corrected, pay the proper tax and you can use the income you actually earned. As the saying goes, you cant have your cake and eat it.

Thrugelmir

The amount that you invoice to customers has no relevance.