SA302 - declaring self-employed earnings to mortgage lender

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rachelleigh73
rachelleigh73 Posts: 38 Forumite
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in Mortgages & endowments
Hi all

I am in the process of putting my first year of self employment into a tax return. The tax return will be used to produce form SA302 which will be used to support my first ever mortgage application.

Am I right in thinking that I shouldn't try to minimise my tax liability on this return? Does it make a difference to the amount a mortgage lender will allow me to borrow?

With thanks in advance 😊

Rachel
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  • ACG
    ACG Posts: 23,756 Forumite
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    Are you a sole trader or limited company?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • amnblog
    amnblog Posts: 12,458 Forumite
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    As a sole trader your profit is listed on your SA302 as your self employed income. That is the figure lenders use for affordability. Therefore you are right that lower profit is lower tax, but less lending potential.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • anselld
    anselld Posts: 8,301 Forumite
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    rachelleigh73 wrote: »
    Am I right in thinking that I shouldn't try to minimise my tax liability on this return? Does it make a difference to the amount a mortgage lender will allow me to borrow?

    You are right in thinking you should fill in the form truthfully based on the facts. There is no way to "minimise tax liability" other than being dishonest.
  • rachelleigh73
    rachelleigh73 Posts: 38 Forumite
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    Thanks for the replies - much appreciated ��

    ACG - I'm a sole trader.

    Anselld - not dishonest - just looking to make an informed decision.
  • David_White
    David_White Posts: 892 Forumite
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    anselld wrote: »
    You are right in thinking you should fill in the form truthfully based on the facts. There is no way to "minimise tax liability" other than being dishonest.

    Total nonsense.
    I am a Mortgage Broker
    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.
    This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • ACG
    ACG Posts: 23,756 Forumite
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    Then what amn says is spot on.

    I agree with David, it is nonsense.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • amnblog
    amnblog Posts: 12,458 Forumite
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    This is fun! - I agree with ACG and David
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • First_time_buyer_lauren
    First_time_buyer_lauren Posts: 12 Forumite
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    We have literally just today been accepted for our first mortgage (subject to valuation) we went with Santander through a MA because they only went off the past years earnings, my partner is self employed and I have been keeping his books. I completely disagree with the "dishonest" comment, we maximised ours by not claiming for everything that we could have claimed for when doing the tax return, the only people that have been done out of money is ourselves as we now have a rather huge tax bill to pay by january (not unaffordable by any means though which is something you need to keep in mind).
    :)
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    rachelleigh73 wrote: »
    Am I right in thinking that I shouldn't try to minimise my tax liability on this return?

    By what means? Be more specific.
  • Typhoon2000
    Typhoon2000 Posts: 1,122 Forumite
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    Thrugelmir wrote: »
    By what means? Be more specific.

    I guess he means if he puts down the 20k expense he incurred for buying new machinery for his business on his tax return, his profit will be right down and he will pay less tax.
    If he doesn't he will pay more tax but as profit is higher, but he will be able to get a bigger mortgage.
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