Can filling out a tax return late affect my mortgage application?

Self Employed? You will need your SA302 to buy a home

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Over 5.5 million UK taxpayers have less than a month to submit their Self-Assessment tax return. The deadline is 31 January and HMRC has warned that a penalty will apply for those who do not meet the deadline.

The tax authority has said that millions of taxpayers are at risk of an immediate £100 fine if they miss the deadline. Whilst most tax is automatically deducted from workers’ wages, savings or pensions, the following list highlights whether you need to submit a tax return this January:

  • If you are self-employed
  • You have an annual income above £100,000
  • You earned over £2,500 from renting your property out
  • You earned any income from abroad that needs to be taxed
  • Are an employee claiming expenses in excess of £2,500
  • A shareholder or limited company Director
  • Received more than £2,500 in other taxable income, for example, commission or tips
  • Your partner received Child Benefit and either of you have an annual income above £50,000

Financial Secretary to the Treasury, Mel Stride, has said, “It is encouraging that around 52% of taxpayers have already completed their self-assessment tax returns…HMRC is encouraging all Self-Assessment filers to complete their returns by 31 January and is offering support every step of the way.”

Self-Assessment late penalties:

There is an initial fixed £100 penalty, which is applied even if there is no tax to pay and you miss the deadline. Ideally, you should be aiming to submit your tax return early or on time, as the fines do start to increase over time:

  • After 3 months there are additional penalties of £10 per day, to a maximum of £900
  • After 6 months there is a further fine of 5% of your tax due, or £300 (whichever is greater)
  • After 12 months, another £300 fine or 5% of your tax owed (whichever is greater)

There can be additional penalties for paying late and ideally you do not want to start the New Year off with fines. Equally so, there can be implications for applying and processing your mortgage on time if you have not submitted your returns.

How can this affect my mortgage application?

When applying for a mortgage, one of the largest hurdles can be proving your income. As a self-employed mortgage applicant, your lender will require proof that you will be able to pay for a loan. Workers that have traditional payslips can provide these, as well as contracts but it becomes slightly trickier if you are self-employed.

One piece of evidence you will need is a form called an “SA302”. Most lenders will require a self-employed applicant to produce at least three recent SA302 forms.

To receive your SA302 forms from HMRC, you will have had to have filled out your Self-Assessment tax return. If you are in the process of applying for a mortgage, then delaying in submitting your tax return may result in a delay in receiving the necessary documentation from HMRC. This could result in delays to your mortgage approval.

Once you have completed your returns, you can usually download your ‘SA302’ forms from the HMRC portal. Your forms can be mailed; however, you will need to allow at least two weeks for these to arrive.

Help with mortgages for the self-employed

Applying for a mortgage is often met with a mixed feeling of anxiety and confusion. As a self-employed mortgage applicant, it can seem like there are endless hoops to jump through. Proving your income can have various complications, and as a rule of thumb, you will usually need an accountant to sign off two years’ worth of accounts, that support your application.

It may be easier to get your mortgage approved if you can provide a decent deposit. Mortgage providers will usually base their decision on what to lend you, based on an average of your profits over a period. You will be assessed based on various criteria, and having your recent, up to date SA302’s is very important.

Seeking professional advice

If you are working for yourself then applying for a mortgage can be a little trickier. Loan.co.uk has mortgage advisors who are on hand to offer expert advice, immediately. With specialists in helping any self-employed mortgage applicant you’ll be just fine. Simply fill out your details on the website and one of our brokers will call you back. Loan.co.uk will find you a loan or mortgage, at the best rate, suited to your circumstances.

Some of the benefits of using Loan.co.uk are:

  • Automatic searches of over 5,000 current market loans
  • Quotes are all FREE
  • Award winning broker
  • Credit score unaffected
  • No upfront fees
  • Direct to lender

HMRC says “pay up”

According to the Telegraph, HM Revenue & Customs have advised that people with outstanding debts to the taxman must pay up – by making every effort possible, including taking out commercial loans.

If you are getting close to your payment deadline and know you are not going to be able to cover the amount, then talk to HMRC rather than face penalties.You can get an estimate of how much you will need to pay in penalties and interest if you have missed the deadline for sending your Self Assessment tax return and paying your Self Assessment tax bill here. There is an Income Tax helpline available on 0300 200 33400.

Be wary of rushing out and taking ‘payday loans’ or borrowing money in a panic. Chat with our team today at Loan.co.uk as we can scan over 5,000 loans across the market. We offer free advice, credit checks and assistance every step of the way in securing your money. Personal loans can range from £100 to £35,000 and there are no upfront fees.

Our goal is to help you fulfil yours

The GOV website has step-by-step guide available to complete your Self-Assessment tax return, a hotline to ring on (0300 200 3310) as well as various social media channels. If you need advice on any concerns you have in regard to your mortgage application, or future applications then we are here to help. Our customer service number is 0800 131 0280 and you can email us at welcome@loan.co.uk

Loan.co.uk offers expert advice, for free. Our goal is to help you fulfil yours.

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