Mortgage on Directors Loan
Discussion
A close friend wants to equity release his house and invest the money into something.
He mentioned he can't get a remortgage as he has a directors loan account of about £900k and is drawing that down rather than paying himself wages ( makes sense more tax efficient etc)
Lenders ask for SA302 but he can't actually produce one as doesn't need to.
Anyone been in a similar position that can help? I forgot the name but there is / was a mortgage broker who regularly posted here.
He mentioned he can't get a remortgage as he has a directors loan account of about £900k and is drawing that down rather than paying himself wages ( makes sense more tax efficient etc)
Lenders ask for SA302 but he can't actually produce one as doesn't need to.
Anyone been in a similar position that can help? I forgot the name but there is / was a mortgage broker who regularly posted here.
JimmyConwayNW said:
A close friend wants to equity release his house and invest the money into something.
He mentioned he can't get a remortgage as he has a directors loan account of about £900k and is drawing that down rather than paying himself wages ( makes sense more tax efficient etc)
Lenders ask for SA302 but he can't actually produce one as doesn't need to.
Anyone been in a similar position that can help? I forgot the name but there is / was a mortgage broker who regularly posted here.
Are you thinking of Sarnie?He mentioned he can't get a remortgage as he has a directors loan account of about £900k and is drawing that down rather than paying himself wages ( makes sense more tax efficient etc)
Lenders ask for SA302 but he can't actually produce one as doesn't need to.
Anyone been in a similar position that can help? I forgot the name but there is / was a mortgage broker who regularly posted here.
I assume he submits self assessment returns (SA100) each year? If so he should be able to print off SA302 - it just shows HMRC's tax calculation based on his tax return for that particular year
ETA I'm probably missing something but instead of equity release why doesn't he just take the money out of the Company (i.e. draw down the Director's Loan)?
JimmyConwayNW said:
A close friend wants to equity release his house and invest the money into something.
He mentioned he can't get a remortgage as he has a directors loan account of about £900k and is drawing that down rather than paying himself wages ( makes sense more tax efficient etc)
Lenders ask for SA302 but he can't actually produce one as doesn't need to.
Anyone been in a similar position that can help? I forgot the name but there is / was a mortgage broker who regularly posted here.
Unless there's a specialist lender that will take the director loan into account, no income= no mortgage.He mentioned he can't get a remortgage as he has a directors loan account of about £900k and is drawing that down rather than paying himself wages ( makes sense more tax efficient etc)
Lenders ask for SA302 but he can't actually produce one as doesn't need to.
Anyone been in a similar position that can help? I forgot the name but there is / was a mortgage broker who regularly posted here.
The thing about SA302s is that HMRC does not issue these automatically. They have to be requested. In fact, a few years ago HMRC announced they wouldn't even be issuing them at all. They seem to have back-tracked on that and will now issue them if you contact them and request one.
SA302s were invented as part of the Self Assessment system. Before Self Assessment, the Inland Revenue (of old) issued what was called an Income Tax assessment to every taxpayer who submitted a tax return. The assessment was issued once the Revenue had "agreed" the details shown on the return. Lenders traditionally asked to see these assessments if a tax payer was applying for a loan/mortgage as they indicated that the Inland Revenue had OK'd the figures on the return.
With SELF Assessment, the new tax rules effectively passed the legal obligation for calculating tax liabilities from the Revenue to the taxpayer - so the old style "Tax Assessment" ceased to exist. In essence, HMRC no longer "agrees" the information provided by a taxpayer.
The Revenue said they would issue the "new" document called an SA302 if requested. The thing about the SA302 is that it is not confirmation of the taxpayer's income or tax liabilities. HMRC has no "opinion" on how accurate the figures submitted by the tax payer are.
But it is the nearest thing to an old style official tax assessment that can be obtained from HMRC - although it actually verifies nothing apart from the figures submitted by the taxpayer - even if they were wrong.
SA302s were invented as part of the Self Assessment system. Before Self Assessment, the Inland Revenue (of old) issued what was called an Income Tax assessment to every taxpayer who submitted a tax return. The assessment was issued once the Revenue had "agreed" the details shown on the return. Lenders traditionally asked to see these assessments if a tax payer was applying for a loan/mortgage as they indicated that the Inland Revenue had OK'd the figures on the return.
With SELF Assessment, the new tax rules effectively passed the legal obligation for calculating tax liabilities from the Revenue to the taxpayer - so the old style "Tax Assessment" ceased to exist. In essence, HMRC no longer "agrees" the information provided by a taxpayer.
The Revenue said they would issue the "new" document called an SA302 if requested. The thing about the SA302 is that it is not confirmation of the taxpayer's income or tax liabilities. HMRC has no "opinion" on how accurate the figures submitted by the tax payer are.
But it is the nearest thing to an old style official tax assessment that can be obtained from HMRC - although it actually verifies nothing apart from the figures submitted by the taxpayer - even if they were wrong.
I must completely missing the point of all this but would like to understand. If he's got money to invest, why does he need to borrow money as a mortgage? Is it like leverage to buy a rental property?
And how does it work drawing down a director's loan instead of being paid a salary? Surely the money he's being paid to live on will end up being a permanent move of cash, and loans have to be repaid eventually. Or is it that he lent the money to the business earlier and is now getting repayments back? I can understand that receiving repayments isn't income to be taxed.
And how does it work drawing down a director's loan instead of being paid a salary? Surely the money he's being paid to live on will end up being a permanent move of cash, and loans have to be repaid eventually. Or is it that he lent the money to the business earlier and is now getting repayments back? I can understand that receiving repayments isn't income to be taxed.
Eric Mc said:
The thing about SA302s is that HMRC does not issue these automatically. They have to be requested. In fact, a few years ago HMRC announced they wouldn't even be issuing them at all. They seem to have back-tracked on that and will now issue them if you contact them and request one.
SA302s were invented as part of the Self Assessment system. Before Self Assessment, the Inland Revenue (of old) issued what was called an Income Tax assessment to every taxpayer who submitted a tax return. The assessment was issued once the Revenue had "agreed" the details shown on the return. Lenders traditionally asked to see these assessments if a tax payer was applying for a loan/mortgage as they indicated that the Inland Revenue had OK'd the figures on the return.
With SELF Assessment, the new tax rules effectively passed the legal obligation for calculating tax liabilities from the Revenue to the taxpayer - so the old style "Tax Assessment" ceased to exist. In essence, HMRC no longer "agrees" the information provided by a taxpayer.
The Revenue said they would issue the "new" document called an SA302 if requested. The thing about the SA302 is that it is not confirmation of the taxpayer's income or tax liabilities. HMRC has no "opinion" on how accurate the figures submitted by the tax payer are.
But it is the nearest thing to an old style official tax assessment that can be obtained from HMRC - although it actually verifies nothing apart from the figures submitted by the taxpayer - even if they were wrong.
You (or your accountant) can print them off from your Gov Gateway accountSA302s were invented as part of the Self Assessment system. Before Self Assessment, the Inland Revenue (of old) issued what was called an Income Tax assessment to every taxpayer who submitted a tax return. The assessment was issued once the Revenue had "agreed" the details shown on the return. Lenders traditionally asked to see these assessments if a tax payer was applying for a loan/mortgage as they indicated that the Inland Revenue had OK'd the figures on the return.
With SELF Assessment, the new tax rules effectively passed the legal obligation for calculating tax liabilities from the Revenue to the taxpayer - so the old style "Tax Assessment" ceased to exist. In essence, HMRC no longer "agrees" the information provided by a taxpayer.
The Revenue said they would issue the "new" document called an SA302 if requested. The thing about the SA302 is that it is not confirmation of the taxpayer's income or tax liabilities. HMRC has no "opinion" on how accurate the figures submitted by the tax payer are.
But it is the nearest thing to an old style official tax assessment that can be obtained from HMRC - although it actually verifies nothing apart from the figures submitted by the taxpayer - even if they were wrong.
JimmyConwayNW said:
Drawing down the 900k he loaned the company presumably.
Sounds like great advice from an accountant initially but causes a bit of an issue if trying to finance a car, move house or obtain credit.
If Sarnie happy to have a chat with him its worth a go.
More than happy to chat if you want to give me a call or drop me a message Sounds like great advice from an accountant initially but causes a bit of an issue if trying to finance a car, move house or obtain credit.
If Sarnie happy to have a chat with him its worth a go.
He has a LTD company that owes him £900k, so he is not taking salary or dividends, then his SA302 will not have any income on it. He will need a lender that will use his share (based on % shareholding of company) of the company net profits. There are a few mainstream lenders that do this, most after corp tax. They will use the net profit from his LTD company accounts as his income.
Those lenders need to see his company is making a profit and base their loan calculations on that profit. If the company isn’t making a profit and he is withdrawing retained profits via repayment of directors loan then it’s not going to work with any lender.
Eric Mc said:
The thing about SA302s is that HMRC does not issue these automatically. They have to be requested. In fact, a few years ago HMRC announced they wouldn't even be issuing them at all. They seem to have back-tracked on that and will now issue them if you contact them and request one.
SA302s were invented as part of the Self Assessment system. Before Self Assessment, the Inland Revenue (of old) issued what was called an Income Tax assessment to every taxpayer who submitted a tax return. The assessment was issued once the Revenue had "agreed" the details shown on the return. Lenders traditionally asked to see these assessments if a tax payer was applying for a loan/mortgage as they indicated that the Inland Revenue had OK'd the figures on the return.
With SELF Assessment, the new tax rules effectively passed the legal obligation for calculating tax liabilities from the Revenue to the taxpayer - so the old style "Tax Assessment" ceased to exist. In essence, HMRC no longer "agrees" the information provided by a taxpayer.
The Revenue said they would issue the "new" document called an SA302 if requested. The thing about the SA302 is that it is not confirmation of the taxpayer's income or tax liabilities. HMRC has no "opinion" on how accurate the figures submitted by the tax payer are.
But it is the nearest thing to an old style official tax assessment that can be obtained from HMRC - although it actually verifies nothing apart from the figures submitted by the taxpayer - even if they were wrong.
They have been online for over a decade, this post makes producing proof of income seem way harder than it really is.SA302s were invented as part of the Self Assessment system. Before Self Assessment, the Inland Revenue (of old) issued what was called an Income Tax assessment to every taxpayer who submitted a tax return. The assessment was issued once the Revenue had "agreed" the details shown on the return. Lenders traditionally asked to see these assessments if a tax payer was applying for a loan/mortgage as they indicated that the Inland Revenue had OK'd the figures on the return.
With SELF Assessment, the new tax rules effectively passed the legal obligation for calculating tax liabilities from the Revenue to the taxpayer - so the old style "Tax Assessment" ceased to exist. In essence, HMRC no longer "agrees" the information provided by a taxpayer.
The Revenue said they would issue the "new" document called an SA302 if requested. The thing about the SA302 is that it is not confirmation of the taxpayer's income or tax liabilities. HMRC has no "opinion" on how accurate the figures submitted by the tax payer are.
But it is the nearest thing to an old style official tax assessment that can be obtained from HMRC - although it actually verifies nothing apart from the figures submitted by the taxpayer - even if they were wrong.
Gassing Station | Finance | Top of Page | What's New | My Stuff