Do you need to submit expenses in your tax return/ getting a mortgage

**Lucy M** · 15-01-2016, 01:34 PM

Hi,
I'm just submitting my tax return for 2014/15. I also am looking to apply for a mortgage on a self employed basis in the next year or so and I understand that my profitable income will be used to determine the level of mortgage I can get.
As I haven't earned enough to pay taxes I'm actually wondering whether to bother submitting my expenses as I understand that my profitable income is what is used to calculate what mortgage I can get. I realise its negligible but also its going to be quite a lot of work to accurately calculate all my expenses!
My questions are-
1) is it fraudulent in any way to not submit your expenses
2) is it correct that its the profitable income that's used to work out how much mortgage you can get
3) are there any other disadvantages to not submitting them
For info- I won't come out as a loss so can't carry it over to the next financial year.
Please feel free to comment on any questions- I realise many people won't know the answer to qu 2) if you haven't had to do it!
Many thanks!!
Lucy

Simona · 15-01-2016, 01:46 PM

Unless things have changed any mortgage company will want to see maybe 2 years of accounts...they will look at your annual turnover...not your profits....please check this out just to be sure

If you were to approach a financial advisor they would do all the work for you and find you the right mortgage...there is no charge for this because the mortgage company will cover their fee...worth looking into.
Good luck

**Lucy M** · 15-01-2016, 08:29 PM

Thanks Simona.
Do you know if I have to submit expenses to HMRC or is this a choice? I can see lots of disadvantages and no advantages at present!

Simona · 15-01-2016, 08:46 PM

You need to submit your annual turnover ...Minus...your business expenses and minus your business allowances

That will leave you with your profit on which you pay tax...if over £10,600...that being Tax free

I think it is legally required for all expenses to be declared...so HMRC can understand how you calculate your tax...ot no tax as that maybe....please check it out to be sure.

Hope that helps!

**alex__17** · 15-01-2016, 08:51 PM

I had to do it at the end of 2015, they actually look at what's left AFTER expenses are deducted for self employed, so yes lower expenses means you will get more profit and more mortgage.
Our financial advisor advised to put some through or they may get suspicious if you put masses through in subsequent years, but to keep it as minimal as poss! I was newly self employed and there were only 3 or 4 companies that were willing to lend with just one year of accounts, most other wanted 3 years.
In the end the mortgage company I was already with were happy to switch us onto their low fixed rate with no proof of income at all, even when I told them I was no longer employed full time but self employed now, but their view was we'd been paying it fine the last 18 months where I was earning less so had no probs just swapping us, it was called a loyalty product transfer and you could only enquire in last 3 months of current fixed rate but it was a massive relief to have such an easy option, you may be able to do something similar.

**samb** · 15-01-2016, 11:01 PM

If you choose not to put expenses through then that's fine and in terms of getting a mortgage you will be able to borrow more so therefore it's in your interest to not submit expenses. I would definitely go to an independent financial advisor and most companies would like 3 years of tax return figures so although your latest may be higher it will be an average of the 3 years but showing your business is becoming more profitable. (I did this in 2014)

Simona · 16-01-2016, 09:18 AM

I am a bit puzzled...and hope someone can clarify....but my understanding is that those who complete the Annual Tax Return must do so and declare all necessary details...doing otherwise may not be very wise?

I may have misunderstood ...if so apologies...making a false declaration on a tax return may have consequences if there ever was an audit of our account s as we need to keep them for 6 years.
Our expenses ...when taken from our turnover...allow us to pay the right tax ....or not as it maybe ....and enjoy the self employment perks....they have not really much to do with a mortgage application.

Sorry I had to clarify as very confused

Good luck with your mortgage LucyM!

**samb** · 16-01-2016, 10:58 AM

My financial advisor told me it was the best way to get a mortgage. We couldn't have afforded one otherwise. You don't have to declare expenses on your business but obviously you would Normally want to so that you can pay less tax. However it is up to you if you choose to pay for any expenses out of your own pocket as it were. I chose to just put through my percentage of bills and 10% wear and tear and pay for everything else out of my own pocket. It meant I could buy a house.

Simona · 16-01-2016, 11:06 AM

Originally Posted by samb

My financial advisor told me it was the best way to get a mortgage. We couldn't have afforded one otherwise. You don't have to declare expenses on your business but obviously you would Normally want to so that you can pay less tax. However it is up to you if you choose to pay for any expenses out of your own pocket as it were. I chose to just put through my percentage of bills and 10% wear and tear and pay for everything else out of my own pocket. It meant I could buy a house.

Thanks samb...got you!