Income from a limited company is accepted and weighted at 100% where a customer has been trading for 1 year or more.
We generally require businesses to have traded for at least two years. However, we can accept businesses that have been trading for only one year, provided that additional evidence is supplied demonstrating the customer's track record of previous employment at a similar level of income in a related field.
If the customer has a shareholding of less than 50%, we would accept dividends and director's salary for the affordability assessment.
If the customer has a shareholding of 50% or more, we would use director's salary and share of net profit for the affordability assessment.
We will check the net profit for the company to ensure that the customer’s income is sustainable.
Where the business has made a loss in any of the last 2 years or the business’s net worth has been negative in the last 2 years the application will be declined.
We will not accept dividends where the customer’s drawings exceed the net profit of the business for the latest year. Where the dividends exceed the net profit, we will only accept the share of the net profit for our affordability calculations.
Packaging guidance:
Where the business has been trading for 2 years
- The last two years' tax calculations and corresponding Tax Year Overviews (TYOs) - The most recent tax calculation must be dated within the last 18 months
- The last two years' worth of limited company accounts certified by a suitably qualified accountant
- The last three months' business bank statements, showing income and consistent trading in line with the turnover evidenced in the company accounts
- The latest month's personal bank statement showing expenditure
Where the business has been trading for 1 year
- The lastest years' tax calculations and corresponding tax year overviews (TYOs) - The most recent tax calculation must be dated within the last 18 months
- The latest years' limited company accounts certified by a suitably qualified accountant
- Evidence of previous track record (P60, previous contracts, period 12/52 payslip from previous financial year etc)
- The last three months' business bank statements, showing income and consistent trading in line with the turnover evidenced in the company accounts
- The latest month's personal bank statement showing expenditure
Where annual accounts are required, they must be finalised and submitted to Companies House.
The accountants qualification must be verifiable through the association's or institute's website. We will not accept certificates alone.
Acceptable Accountants Qualifications:
- Institute of Chartered Accountants in England & Wales – A.C.A or F.C.A
- Institute of Chartered Accountants of Scotland – C.A (Chartered Accountant), A.C.A.S or F.C.A.S
- Institute of Chartered Accountants in Ireland, also known as Chartered Accountants Ireland – C.A (Chartered Accountant)
- Association of Chartered Certified Accountants – A.C.C.A, F.C.C.A, A.A.P.A or F.A.P.A
- Association of Authorised Public Accountants – A.C.C.A, F.C.C.A, A.A.P.A or F.A.P.A
- Chartered Institute of Management Accountants – A.C.M.A or F.C.M.A
- Certified Public Accountants Association – A.C.P.A or F.C.P.A
- Association of Accounting Technicians – M.A.A.T or F.M.A.A.T
- Association of International Accountants – A.I.A or F.A.I.A [not FAIA (acad)]
- Chartered Institute of Taxation – C.T.A (Fellow), F.T.I.I (Fellow), C.T.A or A.T.I.I
- Institute of Financial Accountants – A.F.A (Associate) or F.F.A (Fellow)
- Chartered Institute of Public Finance & Accountancy – C.P.F.A.
AAT can be accepted where the firm or another accountant from the firm holds one of the above acceptable qualifications.