Ltd company day rate for mortgage application

[northernladuk]

Question was not about what is my day rate........question if you read it, was about if you can or cannot add VAT to give a correllation to the gross income.......

Thanks for your hostile approach though and thanks to others who have been constructive with responses.

I don't see any hostility. Hostility would be something like 'What moron thinks the daily gross rate includes VAT ' but I didn't say that.

I asked the other questions just as an extra. If you think VAT is part of gross income then it is totally conceivable you may have misunderstood something else. Wouldn't be the first time a contractor has put his gross rate down as his net income on a mortgage application. We get a lot of people on here that can't see the difference between rate their company charges and what their personal income is.

Poster above says you are silly so could you berate him as well please?

[TheCyclingProgrammer]

Question was not about what is my day rate........question if you read it, was about if you can or cannot add VAT to give a correllation to the gross income.......

If by gross income you mean turnover, then you should apply your FRS percentage to your day rate + VAT to get the correct figure.

E.g. If your day rate is £500 and your FRS percentage is 14.5% then I suppose you could consider your gross daily rate to be (500 * 1.2 * 0.855) £513.

But when you consider that he FRS surplus is supposed to cover any input VAT you incur and cannot reclaim, including it seems a little silly.

Just use your net day rate.

[Dedwards483]

Your day rate is your day rate. Not your day rate plus VAT. VAT wasn't added or shown when you applied for the gig so won't for anything else.

Are you sure this is one of the speciality mortgages that accept day rate and not net income? How can you have an offer in principle if you don't know your day rate?

Question was not about what is my day rate........question if you read it, was about if you can or cannot add VAT to give a correllation to the gross income.......

Thanks for your hostile approach though and thanks to others who have been constructive with responses.

[Support Monkey]

I just got a mortgage, went via contractor money, took 3 emails and one phone call.

not sure why people feel the need to show accounts

[TheCyclingProgrammer]

FWIW, I found out recently that First Direct will be happy to consider your mortgage application based on a 3 year average of net profit + director salary (but not dividends) x 4. You'll obviously need your accounts to back it up. It could potentially double the amount they'd be willing to lend you compared to if they based it on a multiple of salary + dividends if you've had a high turnover but only extracted dividends up to the higher tax threshold.

[northernladuk]

banks might have been shown to be massively stupid in some areas recently, but I doubt they'd be stupid enough to give you a mortgage based on your inclusive of VAT figure

Very true. They won't lend against it but there is a responsibility for the applicant to put the correct information in. If he doesn't and the banks pick up on it the application may get tagged for investigation and which takes a lot of time and goes in to great detail so something you want to avoid at all costs.

[Martin at NixonWilliams]

Agreed - I have seen some add requests but never that!

I expect that they will ask details of turnover. Note that you can include the additional turnover derived from the flat rate scheme as this belongs to you and not HMRC.

Martin

[jmo21]

banks might have been shown to be massively stupid in some areas recently, but I doubt they'd be stupid enough to give you a mortgage based on your inclusive of VAT figure

[Power Mortgages Ltd]

It is the flat rate they will use, not the flat rate plus VAT.

Hope that helps?

[northernladuk]

Your day rate is your day rate. Not your day rate plus VAT. VAT wasn't added or shown when you applied for the gig so won't for anything else.

Are you sure this is one of the speciality mortgages that accept day rate and not net income? How can you have an offer in principle if you don't know your day rate?

[Pondlife]

I would say no since the VAT doesn't belong to you. Surely they want to see either a few years of accounts or your current contract (which will be rate excl VAT).

[Dedwards483]

Hi all,

new to the site so be gentle!!

Just going through the Joy of a mortgage application with the Halifax through a mortgage broker.......offer has been approved in principle.

My question is with regards to expressing my day rate for the purpose of calculating how much they will lend.........as a VAT registered Ltd company director on the flat rate VAT scheme, can i declare my day rate with the added 20% VAT?? This effectively gives the correct gross figure for any invoices i put through to the client.

Many thanks for any advice,

Damien