Policies and Processes relating to Self Employed Customers

All customers must be based in the UK

Guidance for self-employed applications:

Packaging guide

Affordability calculator

Please check these before completing an Agreement In Principle or Full Mortgage Application.

We offer mortgage solutions for customers in simple partnerships and in limited liability partnerships (LLPs).

Simple partnerships

Simple partnerships are where two or more owners share the business’s profits, and each partner pays tax on their share.

There’s no legal requirement to lodge accounts at Companies House. Instead, simple partnerships can submit self-assessment tax returns much like a sole trader does.  They decide how their share is split, but it’s usually split equally between the partners.

To apply:

We’ll either use the average of the last two years income, or the most recent year’s net profit income, whichever is the lower.

Customers must submit their tax return, tax year overview and three months’ business and personal bank statements:

• tax returns (SA100) that have been submitted to the Inland Revenue and are complete can be used (returns that are shown as ‘in progress’ will not be accepted) or we can accept accounts submitted on their accountants’ software.
• if the latest accounts or tax returns are more than 18 months old, the business performance since that date must be confirmed by a chartered or registered accountant.
• the tax year overview must confirm the customer’s Unique Tax Reference number and the figures on the submission.
• as it's not a legal requirement for sole traders to have separate business banking please make it clear in the application if their personal accounts are being submitted.
• customers who don’t use an accountant should provide their last three months’ personal and business bank statements to support their tax returns.

Salaried and equity partners of LLPs

Salaried & equity partners of LLPs (limited liability partnerships) are usually professionals such as accountants, solicitors, barristers, doctors, and dentists. 

An equity partner owns a portion of a company, is entitled to part of its profit, and receives a regular salary in exchange for their services for the company.

A salaried partner usually works for the company exclusively, while an unsalaried partner may have another job or other investments. A salaried partner may be a part of the company's management team (or even its only manager) while an unsalaried partner has little or no management role.

To apply:

• in most cases we’ll use the last two years tax assessments showing their total earnings for the year (which may be employed and self-employed).
• for some blue-chip LLPs, we can accept a letter from the finance director detailing the customer’s renumeration package together with their payslips.
• we also need to know if there is a professional practice loan in place and what the repayment terms are.

Customers must submit their tax return, tax year overview and three months’ business and personal bank statements:

• tax returns (SA100) that have been submitted to the Inland Revenue and are complete can be used (returns that are shown as ‘in progress’ will not be accepted); alternatively we can accept accounts submitted on their accountants’ software.
• if the latest accounts or tax returns are more than 18 months old, the business performance since that date must be confirmed by a chartered or registered accountant.
• the tax year overview must confirm the customer’s Unique Tax Reference number and the figures on the submission.
• as it's not a legal requirement for sole traders to have separate business banking please make it clear in the application if their personal accounts are being submitted.
• customers who don’t use an account should provide their last three months’ personal and business bank statements to support their tax returns.

What is the definition of a contractor?

We treat anyone who undertakes a contract to perform labour or service or who provide materials, and who earns under £75,000 a year, as self-employed – for these customers please see the information under sole trader, partnership and limited companies.

For self-employed contractors who earn more than £75,000 per year, we’ll calculate their income as their average weekly contract income multiplied by 46.

Customers must send us:

• their latest three months’ consecutive personal bank statements for their main account (this isn’t required if their main account is with NatWest or Royal Bank of Scotland).
• where significant business expenses are identified on the application, three months’ consecutive bank statements (personal or business) detailing these.
• a copy of the contract (or contracts) to encompass a 12-month period, with a minimum of six months’ contracts already completed immediately preceding the date of application.
• confirmation that they’ve taken no more than a six-week break between contracts in the 12-month period.
• confirmation that their tax position is paid and up to date.

We can also help with day-rate contractors who have switched or who are switching either to a fixed short-term contract or to an umbrella company as long as they continue to meet the criteria for our existing high income day rate contractor. 

If a contractor is trading through a limited company, there are some additional criteria:

When using this website to submit an application key the applicant as ‘Self-employed’ NOT ‘Employed’.

The application must be one of the following:

• a single application where the applicant owns 100% of the company.
• a joint application where one applicant owns 100% of the company.
• a joint application where the company is jointly owned by both applicants.
• a joint application where one applicant owns 100% of the company and the other applicant is employed by the company (in this instance the employed applicant’s income should be excluded to avoid double-counting).

Any significant business expenses that are not covered by the applicant’s contract must be fully understood, evidenced and accounted for in the affordability calculation, including:

• car/finance loans.
• extended travel and accommodation costs.
• training courses.
• professional indemnity insurance.
• partner/spouse/employee salaries (spouse’s income only needs to be factored in if their income is being included on the application under the ‘income’ section).

Fixed short-term contracts

Please also include in the application:

• the most recent four weekly payslips.
• a copy of the contract, even where the applicant has not yet started the contract.  If the applicant does not have four weekly payslips then a copy of the contract along with any payslips received so far should be provided.

Umbrella company contracts

Please also include in the application:

• the most recent four weekly payslips
• a copy of the contract, even where the applicant has not yet started the contract 
• the amount to be levied by the Umbrella Company for use of their services deducted from the customer’s income.  If this is not clear, we may not be able to assess the application until we see sight of the first payslip

Other contractors

For any cases that do not fit under the above criteria then our standard PAYE contract worker policy will be applicable.

For all employed PAYE and CIS contractors, please visit our A-Z.

Guidance for contractors

Please refer to our Income and Packaging Guide for income proof.