Only UK and ROI Self Employment will be considered.
1. What is the definition of a Sole Trader?
HMRC confirm that a Sole Trader is anyone who has earned more than £1,000 from their own self-employed business in a tax year (6th April to 5th April).
To qualify for a NatWest Mortgage a customer’s business needs to be trading for a minimum of 2 years and have 2 years trading (earnings) figures
This includes income from Land and Property – Hobby or Professional Landlords.
We will only consider applications from UK or Republic of Ireland Sole Traders who submit their tax returns to HMRC or Irish Revenue Commissioners.
2. What Income do we use?
We will use the average of the last 2 years or the most recent years income, whichever is the lower. This figure is taken from the Net Profit before tax has been paid.
For example, if you apply in September 2020 these must cover tax year April 2018/19. However, if you apply after the 6th October 2020 you would need to supply figures for April 2019/20.
Where the latest accounts / tax returns are more than 18 months old then confirmation of the business performance since that date must be obtained from a Chartered or Registered Accountant. Customers who do not use an Accountant should provide their last 3 months personal and business bank statements, in support of their tax returns, to evidence that personal income and current business turnover remains in line with that declared on the tax returns.
HMRC treat Foster Carers as being self-employed. However, the SA302 is only used to determine any tax and NI payable after any qualifying amount has been deducted.
3. What evidence do you need to provide for this income?
Self-employed customers can complete their tax self-assessments online, which we will accept as proof of income. This must show from the documents that the return has been submitted to the Inland Revenue and is 100% complete. Any returns shown as “In Progress” will not be accepted. We also need to see a copy of their Tax Year Overview.
Submissions which are completed on the Accountants own systems are acceptable on condition that the Tax Year Overview is also provided and confirms the customers Unique Tax Reference number and the figures on the submission.
Foster Carers should provide Local Authority confirmation of the last 2 years payments received, along with confirmation that the customer is still a registered Foster Carer.
4. What other information you need to supply
We want to make sure our self-employed customers can afford their mortgage now and in the future. We are therefore capturing additional information around how customers businesses have been affected due to Covid 19. For each applicant that receives self-employed income we require them to complete our:
It is vital that you give us as much information as possible about your customers situation. Even if they have not been affected by the pandemic. Our underwriters will review each customers circumstance and make an underwriting decision on the information you provide. If there is information omitted, that may help them understand the situation, we can decline the case without appeal.
We require 3 months Business and Personal Bank Statements for all Self-Employed applicants to assess their business turnover and affordability. However, it is important to note that for Sole Traders it is NOT a legal requirement for them to have separate business banking. So, they could use their personal accounts for business purposes. Please make this clear in your application so that we do not chase for information we don’t require.
BEFORE SUBMITTING ANY SELF-EMPLOYED APPLICATION PLEASE REVIEW THE FOLLOWING GUIDE:
PLEASE THEN ENSURE ALL REQUIRED DOCUMENTS ARE UPLOADED TO OUR SYSTEM IN FULL & THEN SUBMITTED SIMULTANIOUSLY. WE WILL LAPSE ALL APPLICATIONS WHERE PACKAGING IS OUTSTANDING 30 DAYS FROM SUBMISSION.
5. How do I check my customers income fits?
For all self-employed cases please check our:
Please check this before completing an Agreement In Principle or Full Mortgage Application.