Advising the self-employed - it’s easier than you think
With the number of self-employed in the UK hitting its highest level since records began in 2014, brokers could be finding themselves with more self-employed customers than ever before. According to recent figures, 15% of all those in work in the UK are now self-employed, with 17.3% of Londoners being self-employed.
However, while self-employed customers do face more unique criteria from lenders, advising this group needn’t be a headache. Proof of income is the biggest hurdle that self-employed borrowers face, as verifying income is not as simple for them as sending off a payslip. Despite this, lenders are becoming more aware of the needs of the self-employed, and are trying to make the application process for self-employed client’s more straightforward.
Usually, self-employed borrowers will have to provide proof of income for the past three years, however lenders will often consider lending based on two years income if the borrower’s business has not yet got three years of accounting records. At Leeds Building Society, there are three ways in which self-employed borrowers can verify their income. These are:
- Using tax calculations from HMRC
When you submit a client’s application you can use their SA302 Tax Calculation and Tax Year Overview. If your client usually sends their tax returns through the HMRC self-assessment online account, they can easily print the required documents online. You can see a step-by-step process of how to download and print these documents here. Alternatively, if they use commercial software to file their tax returns your client will be able to print their Tax Calculation (SA302) from there. However, they will still need to log in to their official online HMRC account to print their Tax Year Overview.
If your client sends in a paper tax return they should automatically receive a copy of their Tax Calculation (SA302) via the post once the return has been processed.
- Using an accountant’s certificate
Using a certificate from a certified accountant is the easiest way to provide the most up to date figures on your client’s income. Furthermore, as long as the fully finalised figures exist, they don’t need to be verified by HMRC.
An accountant certificate form that can be used to verify your client’s income is available here.
- Certified Accounts
Submission of a full set of certified accounts is also acceptable.
To speak to one of our Business Development Team please contact us on 03450 50 5555.
This article contains public sector information licensed under the Open Government Licence v3.0 www.nationalarchives.gov.uk/doc/open-government-licence/version/3/
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