I thought I had the perfect title when I started writing but on second thoughts I think it would have been better to use "You can't have your cake and eat it" - less chance of confusion! :-)
The end of the tax season (31 January) doesn't seem long ago but over the last few days I've noticed that clients are changing their focus. It must be spring.
They've started to think about moving and applying for a mortgage.
And this is where the problems start. A couple of months ago their aim was to minimise profits and therefore tax bills but now profits must be as high as possible to maximise mortgage offers.
Sadly it's not possible to have low profits to pay as little tax as possible while at the same time hoping for mortgages based on "different" profit figures. Lenders, quite rightly, expect proof of income based on the figures submitted to HMRC.
Unfortunately, you just have to "bite the bullet" and accept that if you want a mortgage based on a certain income level you'll have to declare that income and pay the tax. You can't have it both ways
What you must do is accept that if you want your “dream house” you have to pay tax on your profits and move on from there.
If you know the price of the property, we can work back to calculate:
The deposit required
The profits you’ll need to apply for the mortgage
The tax you’ll have to pay on those profits.
Once you have a plan you can achieve your dreams.
Sadly, there aren’t any quick solutions or “easy fixes”.