Refused Mortgage Over And Over

Radicalrooster

MWT said:

So just to be clear, you currently receive payment, gross, from your US 'employer' to your personal bank account and then your accountant takes money from that account via DD to pay HMRC?

Does the accountant provide you with a P60/P11D each year? ... or is there some other annual summary of what you have paid?

Similarly, do you complete a self-assessment return to HMRC each year and if so, do you declare the earnings on the 'employment' pages and what do you use for the PAYE tax reference?

Yes - Currently receive gross payment into my personal current account.

Yes - Accountant then does the sums and a week or so later, a payment is made to HMRC via DD.

I expect I do receive a P60 - I've only been in the job 6 months, but I do remember them mentioning this, yes.

No - I do not complete a self-assessment*.


*The only thing I could think of is last year I did do some freelance work on top of my previous full-time role and I was a sole trader for this period. This has now stopped and I've already paid tax owed for 20-21. Could this be confusing things?

I don't declare this on my mortgage applications as it was a small amount and my full-time salary is more than enough to cover what we need to borrow.

MWT

Radicalrooster said:

On a positive note - My employer said they are willing to do whatever they need to in order to help me secure a mortgage.

What if they were to setup a UK entity/office/address in the UK? And what if they then handled my PAYE and NI like a regular UK employer?

Would that make everything much easier?

Sorry, forgot this bit...

Your employer should take advice before doing anything that would place them as resident within the UK as it can have an impact on their own tax position, VAT etc.

Depending on what they do and how you help them it may be time for them to take that step anyway and yes, if they were resident in the UK and properly registered as an employer then it would be a much cleaner picture for lenders.

getmore4less

Just because HMRC will accept you get taxed under a PAYE regime does not automatically make you an employee under employment law.

There are quite a few discrepancies between employment law and the way HMRC treat workers/employees which can catch people out.

The other issue with having a US employer is any lender cannot  use UK employment law for their risk assessments and would have great difficulty in dealing with defaults where they would like to use things like attachment of earning. 

Creating a UK entity to employ you is not without its own problems,  they would have to employ you under UK employment laws which are very different to the US.

Are employer NI contributions getting paid under this current regime?

Radicalrooster

getmore4less said:

Just because HMRC will accept you get taxed under a PAYE regime does not automatically make you an employee under employment law.

There are quite a few discrepancies between employment law and the way HMRC treat workers/employees which can catch people out.

The other issue with having a US employer is any lender cannot  use UK employment law for their risk assessments and would have great difficulty in dealing with defaults where they would like to use things like attachment of earning. 

Creating a UK entity to employ you is not without its own problems,  they would have to employ you under UK employment laws which are very different to the US.

Are employer NI contributions getting paid under this current regime?

Many thanks for your insight - No, my employer/myself do not pay Employer NI. According to my accountant, as they are US-based, they are not liable for NI.

MWT said:

Radicalrooster said:

On a positive note - My employer said they are willing to do whatever they need to in order to help me secure a mortgage.

What if they were to setup a UK entity/office/address in the UK? And what if they then handled my PAYE and NI like a regular UK employer?

Would that make everything much easier?

Sorry, forgot this bit...

Your employer should take advice before doing anything that would place them as resident within the UK as it can have an impact on their own tax position, VAT etc.

Depending on what they do and how you help them it may be time for them to take that step anyway and yes, if they were resident in the UK and properly registered as an employer then it would be a much cleaner picture for lenders.

This was my thinking. I understand my hopes of getting a mortgage now would have to be put on hold for six months or so? But if it meant next time it would be much easier (and my employer are willing) then perhaps this is the best next step?

MWT

Radicalrooster said:

MWT said:

So just to be clear, you currently receive payment, gross, from your US 'employer' to your personal bank account and then your accountant takes money from that account via DD to pay HMRC?

Does the accountant provide you with a P60/P11D each year? ... or is there some other annual summary of what you have paid?

Similarly, do you complete a self-assessment return to HMRC each year and if so, do you declare the earnings on the 'employment' pages and what do you use for the PAYE tax reference?

Yes - Currently receive gross payment into my personal current account.

Yes - Accountant then does the sums and a week or so later, a payment is made to HMRC via DD.

I expect I do receive a P60 - I've only been in the job 6 months, but I do remember them mentioning this, yes.

No - I do not complete a self-assessment*.


*The only thing I could think of is last year I did do some freelance work on top of my previous full-time role and I was a sole trader for this period. This has now stopped and I've already paid tax owed for 20-21. Could this be confusing things?

I don't declare this on my mortgage applications as it was a small amount and my full-time salary is more than enough to cover what we need to borrow.

Talk to your accountant, explain that you are having problems getting a mortgage and clarify with them who you should be declaring as your employer and ask them at the same time which class your NI payments are being made under...

If they say it is class 1 then ask them who is paying the Employers contribution?

All of this may be just fine and is being handled properly but you aren't using the right details when presenting your earnings to lenders, but if you are to present yourself as 'employed' there is going to be an employer reference somewhere and that employer would be paying an NI contribution for you.

Similarly it is difficult to be in a position where you are receiving your earnings gross and still be an employee, and not either self-employed or a sole trader.

Generally this level of detail would be on a payslip, do you get one from your accountant?

Radicalrooster

MWT said:

Radicalrooster said:

MWT said:

So just to be clear, you currently receive payment, gross, from your US 'employer' to your personal bank account and then your accountant takes money from that account via DD to pay HMRC?

Does the accountant provide you with a P60/P11D each year? ... or is there some other annual summary of what you have paid?

Similarly, do you complete a self-assessment return to HMRC each year and if so, do you declare the earnings on the 'employment' pages and what do you use for the PAYE tax reference?

Yes - Currently receive gross payment into my personal current account.

Yes - Accountant then does the sums and a week or so later, a payment is made to HMRC via DD.

I expect I do receive a P60 - I've only been in the job 6 months, but I do remember them mentioning this, yes.

No - I do not complete a self-assessment*.


*The only thing I could think of is last year I did do some freelance work on top of my previous full-time role and I was a sole trader for this period. This has now stopped and I've already paid tax owed for 20-21. Could this be confusing things?

I don't declare this on my mortgage applications as it was a small amount and my full-time salary is more than enough to cover what we need to borrow.

Talk to your accountant, explain that you are having problems getting a mortgage and clarify with them who you should be declaring as your employer and ask them at the same time which class your NI payments are being made under...

If they say it is class 1 then ask them who is paying the Employers contribution?

All of this may be just fine and is being handled properly but you aren't using the right details when presenting your earnings to lenders, but if you are to present yourself as 'employed' there is going to be an employer reference somewhere and that employer would be paying an NI contribution for you.

Similarly it is difficult to be in a position where you are receiving your earnings gross and still be an employee, and not either self-employed or a sole trader.

Generally this level of detail would be on a payslip, do you get one from your accountant?

Yes, I receive a payslip from my accountants.

It shows gross, net, NI number, NI payment, tax code, student loan plan, payments and deductions.

But I don't see anywhere the class of NI? I'll ask...

Radicalrooster

Ok so I've gone and scared myself.

I found this thread about someone who applied for three mortgages at once and then got a fraud marker - https://forums.moneysavingexpert.com/discussion/6163507/unfair-fraud-markers-placed/p1

I am worried that since I have applied for a number of mortgages since September that this may also happen to me...

I must note - I applied one at a time and based on advisor's recommendations, but the fact is I have been declined by three lenders in the space of two months.

(When I mentioned Halifax and Nationwide earlier, those were phone calls only, not applications).

MWT

Radicalrooster said:

Yes, I receive a payslip from my accountants.

It shows gross, net, NI number, NI payment, tax code, student loan plan, payments and deductions.

But I don't see anywhere the class of NI? I'll ask...

On a normal UK employee payslip the NI payment would show on two lines, one for 'Employee' and one for 'Employer', also there would be the employer name and an 'Employer PAYE Reference' somewhere on the payslip, it will typically be in the form '999/AA99999'.

The class of NI may not be shown, but yes, your accountant can confirm.

Radicalrooster

MWT said:

Radicalrooster said:

Yes, I receive a payslip from my accountants.

It shows gross, net, NI number, NI payment, tax code, student loan plan, payments and deductions.

But I don't see anywhere the class of NI? I'll ask...

On a normal UK employee payslip the NI payment would show on two lines, one for 'Employee' and one for 'Employer', also there would be the employer name and an 'Employer PAYE Reference' somewhere on the payslip, it will typically be in the form '999/AA99999'.

The class of NI may not be shown, but yes, your accountant can confirm.

Yes I see the two lines for 'employee NI' and 'employer NI' - The employer line is £0.00.

I don't see that reference anywhere, so I'll ask my accountants to confirm.

MWT

Radicalrooster said:

MWT said:

Radicalrooster said:

Yes, I receive a payslip from my accountants.

It shows gross, net, NI number, NI payment, tax code, student loan plan, payments and deductions.

But I don't see anywhere the class of NI? I'll ask...

On a normal UK employee payslip the NI payment would show on two lines, one for 'Employee' and one for 'Employer', also there would be the employer name and an 'Employer PAYE Reference' somewhere on the payslip, it will typically be in the form '999/AA99999'.

The class of NI may not be shown, but yes, your accountant can confirm.

Yes I see the two lines for 'employee NI' and 'employer NI' - The employer line is £0.00.

I don't see that reference anywhere, so I'll ask my accountants to confirm.

That may be your problem then...

No employers NI being paid and no employer reference is a clear indication that you are not actually employed...

Will be interesting to hear what your accountant has to say ...