Last reviewed: June 2026
TL;DR- Most lenders require a minimum of two years of self-employed trading history and accounts to assess income - some accept one year in specific circumstances.
- For sole traders and partnerships, lenders typically use net profit as the assessable income figure. For limited company directors, lenders may use salary plus dividends, or salary plus share of net profit.
- SA302 tax calculations and tax year overviews from HMRC are the standard income evidence documents, alongside certified accounts.
- Income averaged over two or three years is common practice - a significant drop in the most recent year may reduce the maximum loan available.
How Lenders Define Self-Employed
For mortgage purposes, lenders typically treat a borrower as self-employed if they own 20-25% or more of the business through which they earn their income, depending on the lender's specific definition. This covers sole traders, partners in partnerships and limited company directors with a significant ownership stake. Employees with a small shareholding in their employer are not typically treated as self-employed for mortgage purposes.
Income Assessment for Sole Traders and Partnerships
For sole traders and partnerships, most lenders assess income based on net profit as declared on self-assessment tax returns and confirmed by SA302 tax calculations. Some lenders use the average of the last two or three years' net profit; others use the lower of the last two years; some use the most recent year. A whole-of-market broker can identify which lender's approach produces the best outcome for a specific income profile.
Business expenses deducted to arrive at net profit are not added back by most mainstream lenders - the assessable income is the net profit figure, not the gross income. This means sole traders with high business expenses relative to turnover may be assessed at a lower income than their overall business revenue might suggest.
Income Assessment for Limited Company Directors
For directors of limited companies, income assessment varies more significantly between lenders:
- Salary plus dividends: the most common approach - the director's salary and dividend drawings from the company are combined as assessable income. This reflects what the director actually extracts from the business rather than what the business earns.
- Salary plus net profit: some lenders assess the director's salary plus the company's net profit (or the director's share of it). This approach may give a higher assessable income where profits are retained in the company rather than extracted as dividends.
- Salary only: a small number of lenders assess only the director's salary, which typically produces the lowest assessable income and maximum loan.
Documents Required
The standard documentation package for a self-employed mortgage application typically includes:
- SA302 tax calculations for the last two or three tax years, downloaded from the HMRC online portal or obtained from an accountant.
- Tax year overviews for the same periods, confirming the tax due and paid.
- Certified accounts prepared by a qualified accountant for the same periods.
- Business bank statements for the last three to six months.
- Personal bank statements for the last three to six months.
Some lenders also accept accountant's certificates confirming projected income for the current year, particularly where the most recent full year's accounts show a lower figure due to a one-off event.
One Year of Trading History
A small number of specialist lenders consider applications with only one year of trading history, particularly where the borrower was previously employed in the same field and can demonstrate relevant experience. Income is typically assessed on the one year of accounts available. Rates and criteria are usually less favourable than for borrowers with two or more years of trading history.
Frequently Asked Questions
Can I use projected income from my accountant for a self-employed mortgage?
Some lenders accept an accountant's projection of current-year income, particularly where the business is growing and the most recent year's accounts understate current earnings. This is not universally accepted - lenders that accept projections typically require a qualified accountant's certificate and may also require the actual accounts once the tax year ends. A specialist broker can identify lenders with the most flexible approach.
Does being self-employed affect the maximum loan I can borrow?
The maximum loan is based on the assessable income figure, which for self-employed borrowers is typically net profit or salary plus dividends rather than gross turnover. If the assessable income is lower than the borrower's perception of their earnings, the maximum loan may be lower than expected. Income multiple limits (typically 4-4.5 times) apply in the same way as for employed borrowers.
What is an SA302 and how do I get one?
An SA302 is a summary of the income declared on a self-assessment tax return and the tax calculated as due. It can be downloaded from the HMRC online self-assessment portal, printed from accounting software, or requested from an accountant. Most lenders accept the HMRC-generated version; some also accept accountant-generated equivalents. HMRC no longer sends paper SA302s automatically - they must be requested or downloaded online.
Can my partner's employed income be combined with my self-employed income?
Yes. Joint mortgage applications can combine a self-employed borrower's income with an employed partner's income. The employed partner's income is verified in the standard way (payslips, P60), while the self-employed income is assessed using the documentation above. The combined income is used in the affordability calculation.
