Mortgage for company director on PAYE (sub £100k salary)

ScotKit

Howdy! So I am in a bit of a never-ending circle here, any helpful advice is welcome!

HMRC do not consider me to be self employed as I'm limited company director (with 70% shareholding) but I get paid via payroll and so don't have any requirement to complete self-assessment unless I earn more than 100k on PAYE or take more than 10k in dividends.

I take only a PAYE salary (no dividends) and I'm on an employment contract with the company.  

Income in 19-20 tax year was just over £50k, all paid via payroll.  I have - like every other employee of our company - all my payslips and also my P60 to prove my income.  

For this year, 19-20, my salary is higher, but again below the £100k annualised self-assessment threshold for PAYE, and all via payroll. Again all payslips available and ditto for bank evidence of being paid.

So far so simple, but sadly as I have discovered not so when it comes to mortgage lenders. Despite HMRC not considering me to be self employed, mortgage lenders all consider that I am based on the amount of shares I own in the company.

The circle I seem to be stuck in is as the mortgage lender are insistent that as I am in their 'self-employed' bucket they will only take my SA302 as proof of income.  

My explanations to them that, despite the random rules they may have set (I did say that more politely to them, lol!), as far as HMRC are concerned I am NOT self-employed and should not be submitting a self-assessment tax return as I don't meet the criteria to be required to do so, and that my payslips, P60 and corresponding bank statements showing my pay going in are the valid evidence of my income in the same way they would be for anyone else on a PAYE contract... are falling on deaf ears.

I spoke to HMRC today and asked what I should do and they were lovely but not much help as they just reconfirmed that I don't meet the criteria to be required to do a self-assessment and that I could submit one but it probably wouldn't be 'posted' as when reviewed I'd just be told it wasn't required. Their view was that the mortgage companies are talking rubbish by claiming I am self-employed and should not be asking for something I have no legal basis to need to submit (which to be fair I agree with!) but that's not really any help.

Anyone have any experience on this?

Precise Mortgages are the lender.

haras_n0sirrah

If you own more than 20% of the company you will be treated as self employed. Can hmrc not send you something to show your income recorded with them?

Mitzj7374

haras_n0sirrah said:

If you own more than 20% of the company you will be treated as self employed. Can hmrc not send you something to show your income recorded with them?

ScotKit said:

Howdy! So I am in a bit of a never-ending circle here, any helpful advice is welcome!

HMRC do not consider me to be self employed as I'm limited company director (with 70% shareholding) but I get paid via payroll and so don't have any requirement to complete self-assessment unless I earn more than 100k on PAYE or take more than 10k in dividends.

I take only a PAYE salary (no dividends) and I'm on an employment contract with the company.  

Income in 19-20 tax year was just over £50k, all paid via payroll.  I have - like every other employee of our company - all my payslips and also my P60 to prove my income.  

For this year, 19-20, my salary is higher, but again below the £100k annualised self-assessment threshold for PAYE, and all via payroll. Again all payslips available and ditto for bank evidence of being paid.

So far so simple, but sadly as I have discovered not so when it comes to mortgage lenders. Despite HMRC not considering me to be self employed, mortgage lenders all consider that I am based on the amount of shares I own in the company.

The circle I seem to be stuck in is as the mortgage lender are insistent that as I am in their 'self-employed' bucket they will only take my SA302 as proof of income.  

My explanations to them that, despite the random rules they may have set (I did say that more politely to them, lol!), as far as HMRC are concerned I am NOT self-employed and should not be submitting a self-assessment tax return as I don't meet the criteria to be required to do so, and that my payslips, P60 and corresponding bank statements showing my pay going in are the valid evidence of my income in the same way they would be for anyone else on a PAYE contract... are falling on deaf ears.

I spoke to HMRC today and asked what I should do and they were lovely but not much help as they just reconfirmed that I don't meet the criteria to be required to do a self-assessment and that I could submit one but it probably wouldn't be 'posted' as when reviewed I'd just be told it wasn't required. Their view was that the mortgage companies are talking rubbish by claiming I am self-employed and should not be asking for something I have no legal basis to need to submit (which to be fair I agree with!) but that's not really any help.

Anyone have any experience on this?

Precise Mortgages are the lender.

Do what my friend did, same situation;

Gave all his shares to mother in law and then was considered employed with payslips had this arrangement for over 1 year and then got the mortgage and transfers it all back to him.

He ticked all the boxes. 

ScotKit

haras_n0sirrah said:

If you own more than 20% of the company you will be treated as self employed. Can hmrc not send you something to show your income recorded with them?

yes they do - a P60, like everyone else has who is PAYE

ScotKit

Mitzj7374 said:

haras_n0sirrah said:

If you own more than 20% of the company you will be treated as self employed. Can hmrc not send you something to show your income recorded with them?

ScotKit said:

Howdy! So I am in a bit of a never-ending circle here, any helpful advice is welcome!

HMRC do not consider me to be self employed as I'm limited company director (with 70% shareholding) but I get paid via payroll and so don't have any requirement to complete self-assessment unless I earn more than 100k on PAYE or take more than 10k in dividends.

I take only a PAYE salary (no dividends) and I'm on an employment contract with the company.  

Income in 19-20 tax year was just over £50k, all paid via payroll.  I have - like every other employee of our company - all my payslips and also my P60 to prove my income.  

For this year, 19-20, my salary is higher, but again below the £100k annualised self-assessment threshold for PAYE, and all via payroll. Again all payslips available and ditto for bank evidence of being paid.

So far so simple, but sadly as I have discovered not so when it comes to mortgage lenders. Despite HMRC not considering me to be self employed, mortgage lenders all consider that I am based on the amount of shares I own in the company.

The circle I seem to be stuck in is as the mortgage lender are insistent that as I am in their 'self-employed' bucket they will only take my SA302 as proof of income.  

My explanations to them that, despite the random rules they may have set (I did say that more politely to them, lol!), as far as HMRC are concerned I am NOT self-employed and should not be submitting a self-assessment tax return as I don't meet the criteria to be required to do so, and that my payslips, P60 and corresponding bank statements showing my pay going in are the valid evidence of my income in the same way they would be for anyone else on a PAYE contract... are falling on deaf ears.

I spoke to HMRC today and asked what I should do and they were lovely but not much help as they just reconfirmed that I don't meet the criteria to be required to do a self-assessment and that I could submit one but it probably wouldn't be 'posted' as when reviewed I'd just be told it wasn't required. Their view was that the mortgage companies are talking rubbish by claiming I am self-employed and should not be asking for something I have no legal basis to need to submit (which to be fair I agree with!) but that's not really any help.

Anyone have any experience on this?

Precise Mortgages are the lender.

Do what my friend did, same situation;

Gave all his shares to mother in law and then was considered employed with payslips had this arrangement for over 1 year and then got the mortgage and transfers it all back to him.

He ticked all the boxes. 

Great idea and fair play to him!

Sadly wouldn't be that simple in this case as this is a company with multiple shareholders and also corporate investors.  The shareholdings have significant value and any sale or transfer of more than 5% in a calendar year would require board approval. 

Mitzj7374

How much do you want to borrow?

IT COULD BE LTV?

Salemicus

Is there any possibility of using a different lender who isn't so unreasonable?

ScotKit

Mitzj7374 said:

How much do you want to borrow?

IT COULD BE LTV?

25% deposit, 3x multiplier on salaries of the two applicants.  Affordability fine.

ScotKit

Salemicus said:

Is there any possibility of using a different lender who isn't so unreasonable?

I wish, but this appears to be an industry wide problem with mortgage companies. Everyone we have spoken to says that even though HMRC don't consider me to be self-employed from a tax perspective all mortgage lenders do. If you know any that take a more rational view of PAYE paid shareholding directors then let me know please!

dunstonh

HMRC do not consider me to be self employed as I'm limited company director (with 70% shareholding) but I get paid via payroll and so don't have any requirement to complete self-assessment unless I earn more than 100k on PAYE or take more than 10k in dividends.

That is because you are not self employed.

So far so simple, but sadly as I have discovered not so when it comes to mortgage lenders. Despite HMRC not considering me to be self employed, mortgage lenders all consider that I am based on the amount of shares I own in the company.

As you have a controlling share value, lenders treat you in a similar way to self employed.

The circle I seem to be stuck in is as the mortgage lender are insistent that as I am in their 'self-employed' bucket they will only take my SA302 as proof of income.  

What about lenders that don't need an SA302?

I wish, but this appears to be an industry wide problem with mortgage companies. 

Its not an issue.

 Everyone we have spoken to says that even though HMRC don't consider me to be self-employed from a tax perspective all mortgage lenders do. If you know any that take a more rational view of PAYE paid shareholding directors then let me know please!

it is irrelevant. You are focusing on the wrong thing.  

LRmortgage

Is the company profitable? 

I.e. net profit showing in the annual accounts after all salaries, costs and taxes have been paid?