Most clients want their accountants to save them tax.  That’s fine, that’s what we are here for, it’s in our DNA, we are born to help you save tax.

A way of saving tax is to report your profits as low as possible.  Within the accounting guidelines there are lots of ways of reducing profits and therefore reducing tax.  As said, all fine, that’s what we do.

Except, when a client DOESN’T want to reduce their profits, they want their profits to be as high as possible.  There’s two main reasons why a client would need this:

1. They are raising finance
2. They want a mortgage

I’d like to talk about the mortgage.

You’ve read the papers, getting a mortgage is not as easy as getting a 125% Northern Rock mortgage a few years ago.  It can be difficult, firstly, you need a good mortgage advisor (if you need one contact me on russell@rsaccountancy.co.uk).  Secondly, your accountant needs to know – AS EARLY AS POSSIBLE!

The mortgage provider will look at your company income and if your accountant has been dutifully reducing profits and thereby reducing tax, you may be surprised when the mortgage provider does not offer what you need.

These days, a mortgage provider could either base it on the company profits or your personal income.  Again, if your company profits are high but you don’t take anything out then your personal income could be low.  If they look at personal income – again, you could be scuppered.

So, here’s a 4 step plan to getting the house of your dreams:

1. Work out when you want to buy the property
2. Work out the mortgage you need
3. Ensure that your personal or company or both reflect a level of profitability that will enable you get the mortgage you need
4. Get a mortgage that is based on the highest income, personal and company

Its a massive area and mortgage providers are very tricky to deal with these days - if you need any more help – call me on 0113 394 4616 (111)