Directors - Assessing Income/Affordability

Question 1

Directors of large companies are treated as:

Answer 1

employees for mortgage application process

Question 2

If a director owns more than a set percentage (20-25%) they are:

Answer 2

likely to be treated as self-employed applicant

Question 3

If a director takes a low salary:

Answer 3

Supplement income with dividend payments paid quarterly

However, may be treated by HMRC as salary and tax as income

Low salaries can cause problem substantiating a mortgage as income fluctuates with dividends paid

Companies seeking to minimise tax may show smallest amount of taxable net profit which might not reflect accurately the company’s financial position.