Question 1

What does the self employed income calculator do?

Accepted Answer

The self employed income calculator lets you enter your last two or three tax years of income and shows figures such as latest year income, two year average, three year average and the lowest of the last two years. It is designed to mirror the way many lenders look at self employed income for mortgage assessments.

Question 2

Which self employed profiles can I use this calculator for?

Accepted Answer

You can use the calculator for sole traders and partnerships, limited company directors and CIS workers or contractors. The inputs adjust depending on the option you choose so you can enter net profit, salary plus dividends, salary plus net profit, salary plus retained profits or contract income as appropriate.

Question 3

Do lenders always use a two or three year average for self employed income?

Accepted Answer

Not always. Some lenders will use the latest year figure if income is stable or increasing, while others prefer an average of the last two or three years. If your income has fallen, some underwriters may work from the lower of the last two years instead. The calculator shows all of these figures so you can see how they compare.

Question 4

How does the calculator work for limited company directors?

Accepted Answer

For limited company directors the calculator allows you to select the income basis used by many lenders, such as salary plus dividends, salary plus net profit or salary plus retained profits. You enter the figures for each tax year and the tool totals them to give yearly income and the relevant averages.

Question 5

Is this self employed income calculator the same as a lender’s decision?

Accepted Answer

No. The calculator is a guide only and cannot replicate every lender’s criteria, treatment of losses, add-backs or future changes in income. It is intended to give you a clearer idea of how your figures might be viewed before you speak with a mortgage adviser who can check them against specific lender policies.

Self Employed Income Calculator

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