Quick answer
Most lenders assess limited company directors on salary plus dividends. A significant group instead use salary plus your share of net profit after corporation tax, and a smaller group of specialists will count retained profit even where it was never drawn as a dividend. Because of this, a director who leaves £50,000 in the company rather than drawing it can see maximum borrowing figures more than £100,000 apart between methods.
The three ways lenders assess director income
A limited company director's “income” is not one number — it depends entirely on which of three broad approaches the lender takes:
Salary plus dividendsis the mainstream, most widely used method. The lender adds your salary to the dividends you have actually drawn from the company, usually averaged over the last two years, and applies its income multiple to that total. If you draw most of the company's profit as dividends, this method already captures the bulk of your income.
Salary plus your share of net profitis used by a meaningful group of lenders, particularly those more familiar with small and owner-managed businesses. Instead of looking at what you drew as dividends, they look at the company's net profit after corporation tax and apply your shareholding percentage to it. This tends to favour directors who leave profit in the company for reinvestment, tax planning, or cashflow reasons, since the lender is measuring what the company earned rather than what was paid out.
Salary plus net profit including retained profit is a specialist approach taken by a smaller number of lenders. They count the company's profitability even where a large proportion has never been drawn at all, on the basis that a profitable, well-run company represents a sustainable source of future income for its owner. Where your dividends already exceed your profit share, this specialist figure will simply match the salary-plus-dividends result — the benefit only shows up where retained profit is genuinely higher than what you have drawn.
Retained profit mortgages — how they work
“Retained profit” simply means profit the company has made and kept, rather than distributed to shareholders as dividends. Directors often build up retained profit deliberately — to fund future investment, smooth out a variable trading year, or because it is more tax-efficient to draw income gradually rather than all at once.
A lender that offers a retained-profit assessment will typically ask your accountant to confirm the company's net profit after corporation tax for the last two or three years, alongside confirmation of your shareholding. They then apply your ownership percentage to that profit figure to arrive at your share, before adding your salary and applying their income multiple. Because this approach looks at company performance rather than personal drawings, it can unlock materially higher borrowing for directors who have historically been cautious about how much they draw.
Evidence you'll need
Whichever method a lender uses, expect to provide broadly similar paperwork:
- Two to three years of finalised company accounts, usually prepared or certified by a qualified accountant.
- SA302 tax calculations (or tax year overviews from HMRC) confirming your personal salary and dividend income for the same period.
- An accountant's certificate or reference confirming your shareholding percentage and, where relevant, the company's net profit after corporation tax.
Lenders that assess net profit or retained profit will generally ask for more detail on the company's trading history and financial position than a lender working from dividends alone, so build in extra time for your accountant to prepare the additional paperwork.
Frequently asked questions
Can I get a mortgage using retained profit?
Yes. A minority of specialist lenders will look beyond the dividends you have actually drawn and assess your share of the company's net profit after corporation tax, even where you have chosen to leave that profit in the business. This is common among directors who reinvest profit rather than draw it all as income, and it can support a materially higher mortgage than a lender that only counts drawn dividends.
Do lenders use dividends for mortgages?
Yes — salary plus dividends is the most widely used method across mainstream lenders. They typically want two years of dividend history, evidenced through SA302s, tax year overviews, or an accountant's certificate, and will usually average the two years rather than take the higher figure.
How many years of accounts does a director need?
Most lenders ask for two to three years of finalised company accounts. Some will consider a director with only one year of trading history, particularly where the applicant has a strong employment or trading track record beforehand, but the choice of lender narrows considerably below two years.
What if I pay myself a small salary and dividends?
This is a very common structure for limited company directors and lenders are used to seeing it. What matters is which assessment method a given lender applies to the rest of your remuneration — salary plus dividends only, or salary plus a share of net profit — since that choice affects the total income figure used far more than the salary/dividend split itself.
Does my shareholding percentage matter?
Yes, where a lender assesses net profit rather than dividends drawn. In that case they typically apply your ownership percentage to the company's total net profit after corporation tax, so a director with a 50% shareholding is assessed on half the profit share of a sole director with an identical company.
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Last updated: July 2026
