Employment types

When assessing the maximum mortgage available, Scottish Widows Bank assesses applicants’ sustainable income.

Our view on sustainability differs by employment status and the following guide is there to help with understanding of how we view the earnings of different employment types.

We only accept income paid in sterling.

Employed

Must be on a permanent basis and provide details of employment over a minimum 6 month period. Basic salary always included as ‘sustainable’.

Additional allowable income earned from other sources i.e. not guaranteed income or self employed earnings (e.g. overtime, bonus, shift allowance) may be capped where it constitutes a high proportion of total income.

Contractors

For contractors we require either:

  • A track record of at least one year’s continuous employment with the current employer, with at least six months of the contract remaining; or
  • Two years’ continuous service in the same type of employment.

Self Employed – Sole Trader, a partner in a partnership, holding of 25% or more of shares in a business

All cases are assessed individually. For self-employed income verification we’ll need to see three years’ online or original SA302s both with supporting tax year overviews. Where SA302s aren’t available we can consider three years’ full finalised business accounts. For some applications we may ask for an accountant’s reference.

There’s no prescribed formula on taking either the most recent year’s net profit or an average over the past three years, however all factors are considered to assess the particular risks to the business when looking at trends. For example:

  • Type and age of business
  • Past performance of business and any projection provided

Income figure to be used is dependent upon the nature and size of the business e.g. a one man IT Consultant with minimal capital may fully withdraw all of the profit whereas an Engineering company will likely require to retain an element of the profits to finance the working capital needs of the business.

Income for a Company Director would generally be based on the Director’s salary plus any dividends paid. In addition we may be prepared to factor in any element of the net profit before tax while remaining mindful of the working capital/needs of the company.

In the most basic of companies income is based on the net profit x percentage of applicant’s shareholding and applicant’s director remuneration. If a dividend payment is awarded it would need to be considered sustainable going forward to be included as income.

Doctors and dentists with ‘private work’ in addition to employment must provide a minimum of two years’ verifiable track record before the ‘private’ income may be included in sustainable income. 

Projected income will be considered for doctors, dentists, solicitors (including LLP) and accountants (including LLP).

Other Trading Vehicles

Generally we are not attracted to providing mortgages where income is derived through such a vehicle – such cases may be referred to Credit.

Umbrella Companies

Generally a method where the applicant trades as a Limited Company but is likely to be on a contract through the Umbrella Company where the administration for that company is undertaken by another company. Again such cases may be referred to Credit.

 

Instructions for applicants to obtain a copy of their SA302s and/or Tax Overview documents from the HMRC website

Your client will need to log in to their HMRC online account using their personal details at www.online.hmrc.gov.uk

Obtaining an SA302/Tax Calculation

1. Select ‘Self-Assessment’ (if they are only registered for Self-Assessment then they’ll automatically be directed to this screen when they log in)

2. Follow the link ‘tax return options’.

3. Choose the year from the drop down menu.

4. Follow the link ‘view return’

5. Follow the link ‘view calculation’.

6. Follow the link ‘view and print your calculation’.

7. Follow the link at the bottom of the page to 'print your full calculation'


Obtaining a Tax Overview

1. Select ‘Self-Assessment’ (if they are only registered for Self-Assessment then they’ll automatically be directed to this screen when they log in)

2. Follow the link ‘view account’.

3. Follow the link ‘tax years’

4. Choose the year from the drop down menu and click the ‘Go’ button

5. Follow the link ‘print your Tax Year Overview’.

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Scottish Widows Limited. Registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.

Scottish Widows Unit Trust Managers Limited. Registered in England and Wales No. 1629925. Registered Office in the United Kingdom at Charlton Place, Andover, Hampshire SP10 1RE. Tel: 0345 300 2244. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 122129.

HBOS Investment Fund Managers Limited, registered in England number 941082. Registered office in the United Kingdom at Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 119223.

Scottish Widows Bank is a trading name of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales, no. 2065. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 119278.

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