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If you’re self-employed, most lenders want to see your last two years of SA302 tax calculations and matching tax year overviews from HMRC. Some will work from a single year’s figures depending on your circumstances. An employed applicant can hand over a payslip; a self-employed applicant has to build the picture from a tax return, and that picture usually isn’t complete until your accounting year has actually closed. Here’s what lenders ask for, how sole traders and limited company directors are assessed differently, and the timing mistake that catches people out most often.
Most lenders ask for two years of SA302s and tax year overviews, though some will work from a single year's accounts.
Sole traders are assessed on net profit; limited company directors are usually assessed on salary and dividends, though some lenders also count retained profit.
You can't get a usable SA302 until your tax return for that year has been filed and processed, so figures aren't ready until your accounting year closes.
An accountant's certificate can support your SA302, particularly for newer businesses or accounts that don't line up neatly with the tax year.
Talking to a broker before your accounts are finalised leaves time to address anything that could affect what a lender offers.
How HTG Mortgages Can Help
I deal with self-employed applications regularly and match you to a lender whose criteria fit how your income is actually structured, whether that’s net profit as a sole trader or salary and dividends as a limited company director. If your figures are unusual, a strong year followed by a quieter one, profit left in the business, or accounts that don’t map neatly onto the tax year, I can tell you early which lenders are likely to work with that rather than you finding out after you’ve applied.
What documents do lenders actually ask for?
The starting point for most lenders is your SA302 tax calculation, a summary of the tax you owe for a given tax year, produced either through your HMRC online account or by your accountant’s software. You can’t print or download it until 72 hours after your tax return has been submitted, and HMRC keeps the last four tax years available online.
Alongside the SA302, lenders usually want a matching tax year overview, HMRC’s own record confirming the tax due for that year. The two documents get checked against each other, so the tax year overview is really there to confirm the SA302 is genuine.
Depending on the lender and your circumstances, you might also be asked for business bank statements, an accountant’s certificate, or, for limited company directors, company accounts filed at Companies House.
How many years of accounts do you need?
Most of the lenders I use want two years of figures. I can work with one year’s accounts for some cases, though which lenders that opens up depends on the rest of the application.
One thing that catches people out: I need your accounts to be finalised for a year before I can use those figures, which means sometimes waiting until your accounting year has actually ended rather than working from part-year numbers. If your year end falls a few months before you want to apply, that gap is worth planning around.
Does it make a difference if you’re a sole trader or a limited company director?
It does, because lenders look at a different figure depending on how you trade. Sole traders, and I see more of these than limited company cases, are assessed on net profit, what’s left after business expenses. Limited company directors are usually assessed on salary and dividends taken out of the company, though some lenders will also look at profit retained in the business rather than just what’s been drawn out.
That second point matters more than people expect. A director who takes a modest salary and dividends but leaves a chunk of profit in the business for tax planning reasons can end up looking like they earn less than a sole trader with the same actual income, unless their application goes to a lender that takes retained profit into account.
Around Winchester and the wider Hampshire patch, a lot of the self-employed applications I see are from tradespeople, builders, electricians, plumbers and similar, most of them sole traders.
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A worked example
This is an illustrative example, not a real client. Say a self-employed electrician has two years of accounts: net profit of £32,000 in the first year and £38,000 in the second. Most lenders would take an average of the two years, or in some cases the most recent year on its own if the increase looks like genuine growth rather than a one-off. Compare that to a limited company director drawing a low salary and dividends but leaving profit in the business: on paper their income looks lower than the electrician’s, even if their actual take-home pay is similar, unless the application goes to a lender willing to look at retained profit.
What trips people up
The most common mistake isn’t missing paperwork, it’s timing. By the time your SA302 is ready, the decisions that affect it (how much salary you drew, how much profit you left in the business, whether you claimed every allowable expense) have already been made for that year. Having the mortgage conversation after your accounts are finalised means those decisions are locked in. Having it before means there’s still time to plan around them.
Getting ready if you’re applying in the next year
If you know you’ll want a mortgage in the next six to twelve months, a quick conversation before your accounts are finalised is worth having. It gives you time to check everything’s in order rather than finding out about a problem once your accountant has already filed the return and the numbers can’t be changed.
Related reading: mortgages for limited company directors and how contractors can borrow more cover related income structures. If you’re employed rather than self-employed, see how many payslips you need for a mortgage.
If you want a closer look at what the document itself contains and how it differs from the Tax Year Overview, I’ve covered that in what does an SA302 look like.
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