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  • Archie Davidson

How HMRC can derail your Mortgage Application


If you're self-employed or a member of a partnership, and you have a mortgage in mind for a new home HMRC is warning of significant delays in processing tax year overviews (TYOs). Particularly affected are recipients of SEISS grants. Worrying if you’re collating your 2020/21 accounts for a mortgage or remortgage application, because TYOs are required by lenders, along with other proofs of income.





Slow processing at HMRC


If you e-filed your 2020/21 Self Assessment tax return in May or June slow processing at HMRC will almost certainly delay receipt of your 20/21 TYO. It is unlikely to appear on your HMRC portal until sometime in July at the earliest, and not in the ‘pre Covid’ turnaround time of 24 to 72 hours.


A TYO is HMRC’s overview of your tax for a tax year. It summarises the tax you’ve paid and how much is outstanding. Almost all mortgage lenders require a TYO to accompany your tax computation to evidence the computation is genuine. Delays are partly being caused by claimants who’ve made errors entering SEISS grants in their 20/21 Self Assessments. So HMRC is having to make thousands of manual corrections to get data, including TYOs, appearing online.


HMRC reminds us that “SEISS grants are income”, so they incur income tax and national insurance. Recipients of SEISS grants must file them in the correct sections of their Self Assessment tax return. But many aren't; and error upon error is delaying HMRC’s tax processing.



File your Self Assessment Early?


Technically your April 2021 tax return doesn’t need to be filed until January 2022 and human nature being what it is many leave it to the last minute. We always advise our clients to file it as early as possible. You don’t pay the tax any earlier but we consistently have issues where lenders say by September the previous April’s tax return is too old, and it is highly likely that long delaysat HMRC will continue. So, prioritize the online filing of your Self Assessment tax return and ask for a TYO, because prompt submissions will equate to shorter queues at HMRC, and a way through the logjam.


The team at Mast Financial Services are on hand to help advise you and specialise in helping the self-employed. So don’t hesitate to email or phone us with questions about HMRC, slow moving TYOs, or any other financial concerns or aspirations you would like to discuss.


NOTE


The government’s Self-employment Income Support Scheme (SEISS) was designed for you if you’re self-employed or a partnership member, and your income was shrunk by Covid-19. If you ticked all the boxes, the SEISS gives you a grant of up to 80% of your average monthly trading profits. The fourth round of grants (SEISS 4), which opened late April and closed on 1 June 2021, paid out an overall maximum of £7,500 per-month.

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