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Lenders move to standard proof of income for self-employed

Lenders are increasingly adopting a standard process to verify income on self-employed mortgage applications ahead of the mortgage market review.

Lenders have typically required self-employed borrowers to submit accounts proving 12 months’ income, which had to be signed off by an accountant.

But over recent weeks, lenders have started requesting a standard HM Revenue & Customs form instead – the self-assessment tax calculation, or SA032, form.

Lloyds Banking Group, including its Halifax and BM Solutions brands, NatWest, Principality Building Society, Nationwide and Woolwich have all decided to use the HMRC form when assessing whether self-employed applicants can afford the mortgage.  

Perception Finance managing director David Sheppard says: “I would back using the SA302 form over any other form of income verification for the simple reason that HMRC has details of what people have earned.

“By tallying up with HMRC, there is no scope for borrowers to ly about what they have earned.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. This isn’t that new to be honest, and although it’s more rigorous than requesting an accountant’s reference, there is nothing to stop fraudsters overpaying tax in order to over-inflate their income; one of my clients asked if this was a good idea just last week (no!). Long and short of it is that it’s easier for us as one proof fits all. I like that a lot.

  2. I agree this isn’t new. Whilst this a good ideas in principle, the big issue with SA302s is that HMRC don’t issue these automatically anymore and clients will have to ring and request and wait up to 10 days for them to arrive. Brokers should be getting clients to order at initial meeting/conversation to not waste time, especially if the lender does full underwriting before instructing the valuer, such as Santander.

  3. SA302 only shows the profit made, not the drawings taken. In business, as any accountant will tell you there is a disconnect between profits and cash. They simply are not the same thing.

    An SA302 is there to provide a statement of tax due.

    That is why self cert existed until it was abused. There has to be a better way.

  4. Not accurate figure because losses can be carried forward to offset tax. Lenders and regulators haven’t a clue how to assess self-employed.

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