| Trading history | Usually two years; some lenders accept one |
|---|---|
| Sole traders | Net profit, often averaged over two years |
| Company directors | Salary plus dividends, or salary plus share of profit |
| Contractors | Often day rate × 5 days × 46–48 weeks |
| Main evidence | SA302s and tax year overviews, or accounts |
Who counts as self-employed for a mortgage?
Lenders treat you as self-employed if you are a sole trader, a partner, or a company director who owns a significant share, usually 20% to 25% or more. Contractors and freelancers may be treated as employed or self-employed depending on the lender.
The label matters because it sets which income figure the lender uses and what evidence it asks for.
How are partnership and LLP members assessed?
Lenders usually use your share of the partnership or LLP profit, as shown on your SA302s and partnership accounts. Most want two years, and some average them.
Partners who receive a fixed profit share, common in law and accountancy firms, may be assessed more like employees. New partners can be harder to place, as your profit share may not yet show in a tax return. Some lenders accept a partnership agreement and a letter confirming your expected drawings.
How do lenders calculate sole trader income?
For sole traders, lenders use net profit, which is turnover minus allowable business expenses. Most look at the last two years. Some average them. Others use the latest year, or the lower year if profit has fallen.
If profit grew sharply last year, a lender that uses the latest year could lend noticeably more. If it fell, expect the lender to use the lower figure and ask why.
Once the lender has an income figure, the affordability test is the same as for employed borrowers. Most lenders apply an income multiple, commonly around 4 to 4.5 times, and check monthly costs at a stressed rate. Some lenders offer higher multiples to higher earners. See how much can I borrow.
How do lenders assess limited company directors?
Most lenders use your salary plus dividends drawn. Some use your salary plus your share of the company's net profit, before or after corporation tax. That second method can help directors who leave profit in the company.
| Method | Income counted (illustrative) |
|---|---|
| Salary £12,570 + dividends £50,000 | £62,570 |
| Salary £12,570 + 100% share of £120,000 net profit | £132,570 |
Lenders using net profit usually want an accountant's confirmation and may check the company can afford to pay it out. Some only use post-tax profit. See self-employed mortgages.
How are contractors assessed?
Many lenders assess contractors on their day rate rather than company accounts. A common method is day rate × 5 days × 46 or 48 weeks. Lenders usually want a current contract, a track record in the field and evidence of renewals.
Contractors inside IR35 or paid through an umbrella company may be assessed on payslips instead. CIS workers are often assessed on gross or net pay from CIS statements, depending on the lender.
What documents prove self-employed income?
The core evidence is two years' SA302 tax calculations with matching tax year overviews. You can download them from your HMRC online account 72 hours after filing, for the last four years. Some lenders also want accounts or an accountant's certificate.
Business bank statements, a current contract and management accounts can all help. Our documents checklist lists everything by borrower type.
Does tax planning reduce how much you can borrow?
Often, yes. Keeping salary low, retaining profit or claiming every expense reduces the income many lenders see. That can be the right tax decision but a costly mortgage decision.
If you plan to buy or remortgage within a year or two, talk to your accountant and a broker together. Small changes in how income is drawn can make a real difference.
File your tax return promptly, too. Lenders often want the most recent tax year, and an early return gives you up-to-date SA302s sooner. If profit has risen, this can increase the income a lender accepts.
Are the rules for self-employed borrowers changing?
Making Tax Digital for Income Tax began on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. Lenders still rely mainly on SA302s and accounts.
In June 2026 the FCA consulted on changes to mortgage rules, including making flexible repayments easier for people with variable income. These were proposals at the time of writing, not final rules.
Sources
Checked October 2026. Rules and tax treatment can change, so confirm the current position before acting.
- GOV.UK: Get your SA302 tax calculation
- GOV.UK: Check if you need to use Making Tax Digital for Income Tax
- FCA: Proposals to help more people access mortgages (June 2026)
Frequently asked questions
Can I get a mortgage with one year's self-employed accounts?
Yes, some lenders accept one full year's figures, particularly if you previously worked in the same industry. The choice of lenders is narrower than with two years. Rates and loan-to-value limits may still be competitive with the right lender. A clear explanation of your trading history helps underwriters.
Do lenders average two years of profit?
Many do. Others use the latest year, or the lower of the two if income has fallen. The method can change the loan size significantly, which is why comparing lender policies matters for self-employed borrowers. A broker can show you how each method treats your figures.
Can retained profit in my company be used for a mortgage?
Some lenders will use your salary plus your share of net profit, rather than salary and dividends. They usually need an accountant's confirmation. This can help directors who leave money in the business for tax reasons. Fewer lenders take this approach, so choice is narrower.
Is it harder to get a mortgage if I'm self-employed?
It is not harder if your income is well documented, but it needs more evidence. Lenders' approaches vary more than for employed borrowers, so the same income can produce very different maximum loans with different lenders. Good records and a prompt tax return make the process smoother.
How are contractors assessed for a mortgage?
Many lenders use the day rate multiplied by five days and 46 to 48 weeks a year. They usually want a current contract and some history of contracting. Some need 12 months' track record; others accept less with prior experience.
What if my income fell during the last tax year?
Lenders will usually use the lower, latest figure and may ask why it fell. If it was a one-off with a clear reason and current trading is stronger, some lenders will consider recent management accounts. Disclose it upfront. Supporting evidence, such as new contracts, can help.
Can I get a mortgage as a newly self-employed person?
It is possible if you have moved from employment into the same line of work, and some lenders accept less than a full year in that case. Most lenders still want at least one completed tax year. Expect a narrower choice and closer questions.
Does Making Tax Digital affect my mortgage application?
Not directly. Lenders still mostly rely on SA302s, tax year overviews and accounts. Keeping clean digital records may make it easier to produce up-to-date figures when a lender asks. Lenders may start to accept quarterly update figures in time, but most had not changed their evidence requirements at the time of writing.
Important: This guide is general information, not personal advice. Rules, rates and lender criteria change; speak to an adviser about your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage.