Should I Have A Tax Return?

by | Wednesday 18th Jan 2023 | Mortgage News

Do you need to file a tax return?

Do you need to file a tax return? (Source:

When looking at getting a mortgage as a self-employed person, it can be difficult to get your head round exactly what you need to provide and what the mortgage lenders will need to see. For things like product transfers, chances are that the lender is unlikely to ask for any income evidence as they normally already know your circumstances as an existing borrower. But with new applications, the lender will more than likely need to see some form of tax return or other tax document from you. But why do you need a tax return? And what type of borrower actually needs one?

What Is A Tax Return?

A tax return is a document that details income received by and individual and is used by HMRC to determine how much income tax they need to charge you. Most commonly self-employed people are expected to record their own income received or by enlisting the help of an accountant to do so. The tax return documents can be downloaded via the government’s website and must be completed every year. Failure to declare income to HMRC for tax purposes or falsifying income figures will be considered tax fraud and there can be serious consequences.

Why Do Mortgage Lenders Need To See Tax Returns

If you are not permanently employed receiving PAYE income, there may be several documents that lenders need to see at mortgage application stage. Some examples are tax returns, tax overviews and calculations, limited company accounts. All of which pretty much do exactly the same thing. They show your income (and in the case of limited company accounts) the business expenditure.

If you are employed or receive payslips where tax is already deducted by an employer, mortgage lenders generally only need to see three months payslips in most cases as this income has already had tax paid on it and is easier to track and confirm that it is from a genuine source. With things like self employed income, a tax return and/or a similar document is needed as proof that you are paying tax in the UK and also so that the lender can see that you are earning a consistent income.

Who Should File A Tax Return

Although we have spoken a lot about self-employed people, it is not just the self-employed who need to file tax documents. There are a great many scenarios where you might need to. Here is a list of some of the reasons why you may need to file a tax return:

  • If you run your own business or work for yourself and earned more than £1,000 annually
  • Earned income overseas, or lived abroad and earned income in the UK.
  • Earned more than £100,000 during the last tax year, even if you were in full- time employment.
  • Earned more than £1,000 from renting out property or from running a holiday let, including Airbnb.
  • Earned more than £50,000 while you or your partner claimed child benefit.
  • Earned more than £2,000 from shares or fund dividends.
  • Earned income from a trust. Beneficiaries of someone’s estate must pay inheritance tax on any assets exceeding the allowance of £325,000.

Still Unsure About Your Income Proof And Mortgages?

If you are unsure whether you need to file a tax return, file tax calculations and overviews, file limited company accounts, or any other questions about your income when it comes to mortgages, please give our advisors a call today. We are experts in non-standard income mortgages and we are happy to help.

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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