Penalised for taking maternity leave

MRM93

We’ve been left in a disheartening predicament and was hoping somebody could offer some advice, loop holes or suggestions. 

Quite a long one so strap in!

To paint the picture, I have been self employed for my parents business for 12 years with a very regular and steady income. My husband has a very well paid job and we have had a mortgage together for 5 years. 

In 2022 we had our daughter, resulting in me taking some time off for maternity leave.

Fast forward two years and we have been looking at taking some equity out of the house for home improvements. 

We had a meeting with our mortgage advisor which went well and based off the figures when we last remortgaged in April, we were able to take out 20k easily. 

Today he realized he didn’t have my most recent SA302 - the year 2022-2023 in which I was on maternity leave. 

This was obviously a very low earning year and the result of this is we can no longer borrow any equity - in fact, it showed we would not even be given our current mortgage with our current lender! 

We feel completely deflated as I know my maternity books with linger for the next 3 years, potentially stopping us from being able to do our home improvements in the future. (Personally it feels like discrimination but I won’t get into that!)

The only loop hole I can currently think of, is for my parents to put me on the books as employed for the next 3 months, to gather 3 months worth of pay slips.

Can somebody please tell me how this may affect me when we come to remortgage in April 2026, given my self employment would then start from year 1 again? 

Thanks!

ACG

File your 2023-24 self assessment now if that shows a higher income. Quite a few lenders will look to use the latest years figures if there is an explanation for the drop the previous year. 

kingstreet

We need to know what lender you are referring to. ACG's point about latest year's figures is lender-dependent.

As ACG said, 23/24 is needed. Not just because the figures are better but because most lenders "change over" on 5 October so latest year is 23/24 and no longer 22/23. That's because the previous year ended 18 months earlier.

We'll ignore the parents on the books thing as mortgage fraud is never a clever idea and is easily found out.

MWT

kingstreet said:

We'll ignore the parents on the books thing as mortgage fraud is never a clever idea and is easily found out.

I was actually thinking about this the opposite way around, as 12 years 'self-employed' for the parents business is harder to justify as legitimate, than actually being directly employed by the business in most cases...

... but I agree that planning to do it for 3 months only would be potentially fraudulent, doing it permanently would potentially be more logical.

If there are no other clients supporting the self-employed status it becomes increasingly difficult, but not impossible, to avoid becoming a direct employee.

kingstreet

MWT said:

kingstreet said:

We'll ignore the parents on the books thing as mortgage fraud is never a clever idea and is easily found out.

I was actually thinking about this the opposite way around, as 12 years 'self-employed' for the parents business is harder to justify as legitimate, than actually being directly employed by the business in most cases...

... but I agree that planning to do it for 3 months only would be potentially fraudulent, doing it permanently would potentially be more logical.

If there are no other clients supporting the self-employed status it becomes increasingly difficult, but not impossible, to avoid becoming a direct employee.

Yeah. That too...

penners324

kingstreet said:

We need to know what lender you are referring to. ACG's point about latest year's figures is lender-dependent.

As ACG said, 23/24 is needed. Not just because the figures are better but because most lenders "change over" on 5 October so latest year is 23/24 and no longer 22/23. That's because the previous year ended 18 months earlier.

We'll ignore the parents on the books thing as mortgage fraud is never a clever idea and is easily found out.

Falling foul of IR35 is far more likely. 

Jemma01

You don't get "maternity leave" when properly self employed. Your status is simply "unemployed". That's what the lender is concerned with.