Self-Employed · Mortgage
£620,000 mortgage for a company director whose SA302 showed a fraction of his real income
A director of a profitable IT services business had structured his remuneration tax-efficiently — a low salary and minimal dividends, with significant profit retained in the company. His SA302 suggested an income of £45,000. His company was making over £300,000 a year. Most lenders would only see the former.
Reviewed by Yazdaan Hussain · CeMAP qualified · LLB
1 July 2025
The Situation
Our client had run a successful IT services business for nine years. On paper — specifically on his SA302 tax return — his personal income was £45,200: a modest director's salary supplemented by a small dividend. This was entirely deliberate. His accountant had structured his remuneration to minimise personal tax, retaining the majority of company profits within the business for reinvestment. The company itself was profitable, well-established and held significant reserves. He wanted to purchase a family home at £775,000 with a 20% deposit.
The Challenge
The vast majority of mortgage lenders assess self-employed income based on personal drawings only — salary plus dividends as shown on the SA302. On that basis, the maximum loan available to this client through most of the market was around £200,000, roughly a third of what he needed. Lenders who will assess directors on a different basis — looking at salary plus share of net company profit rather than drawings alone — are in the minority, and their policies vary significantly. The retained profits needed to be presented correctly, with supporting company accounts, to make the case.
Our Approach
We identified lenders whose published criteria for company directors allow assessment on salary plus net profit (before corporation tax), rather than salary plus dividends drawn. We then worked with the client's accountant to ensure the last two years of company accounts were presented in a format that clearly showed the profit available to the director. The submission included a brief narrative explaining the remuneration structure — not as an apology, but as context that pre-empted underwriter questions and demonstrated a clean, well-advised business rather than an attempt to inflate income artificially.
The Outcome
Mortgage offered at £620,000. The lender assessed the income on salary plus director's share of net profit, which accurately reflected the client's financial position. He purchased the property and has since remortgaged through us twice as the business has continued to grow.
Outcome
Mortgage offered at £620,000. The lender assessed the income on salary plus director's share of net profit, which accurately reflected the client's financial position. He purchased the property and has since remortgaged through us twice as the business has continued to grow.
This case study is anonymised. The outcome shown is specific to this client's individual circumstances and is not indicative of results in other cases. Your mortgage is not guaranteed until a formal offer is issued. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. Lockhart Murphy Ltd is authorised and regulated by the Financial Conduct Authority.
- self-employed
- company director
- retained profits
- SA302
- net profit assessment
- limited company
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