Applying for a mortage

[RichardCranium]

In the strict legal sense as a director in so far as you draw a salary, you are taxed as an employee (schedule E), however you are in business on your own account as a contractor trading through a limited company that you own and control and for this reason lenders (the underwriters) will treat you as self-employed.

No, as an employee you draw a salary. As a share-holding director you get a dividend.

You are doing yourself a disservice here.

[MarillionFan]

baby girl, let us know how you get on.

It used to be that contractors would use self cert, or at least 3 years worth of accounts.

I purposely went perm(initially for three months) to get a large mortgage a few years back, but now I've gone back to contracting, Im not sure where I stand either.

[Freelancer Financials]

No, as an employee you draw a salary. As a share-holding director you get a dividend.

You are doing yourself a disservice here.

I'm not sure what the point is that you are trying to make!

I think most contractors with a limited company are aware of their contractor status. I'm simply responding to a contractor who has a genuine query on how their application will be viewed by a high street lender.

Lenders struggle to define "Contractors employment status" as they are seen to be a hybrid when being viewed by underwriters. As Dave Chaplin quotes in CONTRACTORS' HANDBOOK "Contractors inhabit a space where they are not employed, yet they are not self-employed".

For lending purposes the majority of high street lenders view a contractor with a limited company as self-employed when underwriting a mortgage application. Most lenders will ask contractors with a limited company to produce 2-3 years accounts and will base their lending criteria on the contractors salary and dividend drawings.

I agree with you that as an employee you draw a salary and as a share-holding director you get a dividend.

Perhaps I should have replied "If you are working through your own limited company lenders typically view contractors with a limited company as self-employed for underwiting purposes".

And I don't think I am doing myself a disservice here.

[RichardCranium]

Perhaps I should have replied "If you are working through your own limited company lenders typically view contractors with a limited company as self-employed for underwiting purposes".

Yes, that would have been far better.

A recurring theme on here is newbie contractors not understanding the difference between permie-type employed, self-employed and being an employee+shareholder of a LtdCo. That is understandable, but occasionally we get suppliers of financial services and even supposed accountants also getting it wrong. And they tend to do so when suddenly posting to lots of threads.

So they simultaneously advertise their services (against the rules), give incorrect advice and effectively spam us by resurrecting old threads just so they can get their name on here lots of times.

And because you did all that in the past few hours, I assumed you came under the same heading.

[MarillionFan]

A recurring theme on here is newbie contractors not understanding the difference between permie-type employed, self-employed and being an employee+shareholder of a LtdCo. .

There is no difference. You're all disguised employees.

Hector.

[Freelancer Financials]

Yes, that would have been far better.

A recurring theme on here is newbie contractors not understanding the difference between permie-type employed, self-employed and being an employee+shareholder of a LtdCo. That is understandable, but occasionally we get suppliers of financial services and even supposed accountants also getting it wrong. And they tend to do so when suddenly posting to lots of threads.

So they simultaneously advertise their services (against the rules), give incorrect advice and effectively spam us by resurrecting old threads just so they can get their name on here lots of times.

And because you did all that in the past few hours, I assumed you came under the same heading.

I do see your point But reponding to a post in February is not exactly resurrecting old threads! It's been a while since I was last on the forum so I searched on questions and queries relating to financial services.

I'm only interested in giving good advice. No need to spam! If contractors are interested in my service or help it's easy to find me.

Nonetheless, I respect where your coming from and understand your concerns.