Quick answer
There is no single self-employed mortgage income rule. Depending on the lender, the same accounts can be assessed on your latest year alone, an average of your last two years, or — for limited company directors — on dividends drawn versus a share of net profit. Enter your figures once above to see how each of the 53 lenders we track would treat them.
Why self-employed mortgages feel harder — the numbers
The gap is real and measured. The FCA's product sales data shows only around 6% of mortgage sales include a self-employed borrower, against roughly 13% of the UK workforce being self-employed — the regulator itself describes the segment as under-served (FCA CP26/18, 2026). Industry platform data points the same way: self-employed applicants see an average of 12 eligible lenders against 19 for employed applicants (Mortgage Broker Tools, July 2026). The practical answer isn't a special product — it's knowing which lenders assess your income on the basis that suits your accounts, which is exactly what this calculator shows. For the named lenders behind each method, see which lenders use retained profit.
Net profit vs gross profit — what lenders actually use
Almost every UK lender assesses a sole trader, partner or CIS subcontractor on net profit — the figure left after allowable business expenses, shown on your SA302 tax calculation — rather than your gross turnover. A business that turns over £120,000 but nets £45,000 after costs is assessed on the £45,000, not the £120,000. This is the single most common point of confusion for self-employed applicants who quote their turnover expecting it to carry the same weight as an employed salary.
Salary and dividends vs net profit — how directors are assessed
Limited company directors are assessed differently again. Most lenders start from salary plus dividends actually drawn from the company, evidenced by SA302s and finalised company accounts. A smaller group of lenders will instead look at salary plus a share of the company's net profit — applying your shareholding percentage to the company's post-tax profit — which can support a materially higher income figure for a director who reinvests profit rather than drawing it all out as dividends. Some lenders let you use whichever of the two is higher.
Retained profit — the figure most lenders don't look at
Retained profit is the part of a company's net profit that a director chooses to leave in the business rather than draw out as dividends — often for tax efficiency or to fund growth. Most lenders simply don't look at it: they assess what was actually paid to you, not what the company could theoretically afford to pay. A smaller number of specialist and building society lenders will consider retained profit, usually applying your shareholding percentage to the company's total net profit rather than just the dividends drawn — see the retained profit FAQ below for how many.
Where to find your retained profit
Retained profit doesn't sit in one obvious place. It's on the balance sheet, not the profit and loss account (income statement) — though confusingly, the balance-sheet reserve that holds it is often labelled "Profit and loss account" too, sometimes labelled "Retained earnings"; strict micro-entity (FRS 105) accounts may show only a single Capital and reserves total — ask your accountant for the figure. Look under "Capital and reserves" for that line, and use the figure carried forward ("c/f") at the year end, not brought forward ("b/f"). This is different from the "profit for the financial year" shown in the profit and loss account (income statement) itself — that's only the current year's after-tax profit, before dividends. Retained profit for the year = profit for the financial year minus dividends declared; the carried-forward balance-sheet figure is the running total built up across every year the company has traded.
If Companies House only shows "filleted" accounts with no P&L, the balance sheet — and this figure — is still filed and visible. It won't appear on an SA302 or tax year overview, which only cover personal income. Lenders typically apply your shareholding percentage to it and want the accountant's finalised accounts, not management accounts, usually under about 18 months old. Don't mix it up with the director's loan account, share capital, or cash at bank — check with your accountant if you're not sure which line it is.
Frequently asked questions
Do lenders average my self-employed income?
Many do. Of the 40 lenders we track with a published self-employed income basis, 25 either average your last two (or, for a handful, three) years' net profit, or take the lower of your latest year and that average, rather than looking at your most recent year in isolation. Which method a lender uses can move your assessable income by tens of thousands of pounds on the same set of accounts.
Which lenders use latest year's figures?
Of the 40 lenders we track with a published self-employed income basis, 15 assess it on your latest year's net profit alone, with no averaging against an earlier, weaker year. That can work in your favour if your most recent year was your strongest, or against you if it was a dip.
Can I use retained profit?
Of the 23 lenders we track with a published retained-profit rule, 12 will consider a limited company director's share of retained profit rather than only dividends actually drawn — 3 routinely, and a further 9 case-by-case. This matters most for directors who reinvest profit in the business rather than draw it all out as income.
How are dividends treated?
Of the 47 lenders we track with a published director income basis, 19 assess a director on salary plus dividends actually drawn, and won't look beyond that. A further 17 let you use whichever is higher — dividends drawn, or your share of the company's net profit — which is usually the better route if you retain profit in the business.
Do I need 2 years' accounts?
Not always. Of the 52 lenders we track with a published minimum-years requirement, 13 will assess a self-employed applicant on just 1 year of accounts, though most still ask for 2 full years, and a couple ask for 3. A smaller pool of lenders and a bigger deposit are the usual trade-offs for going with just 1 year.
How is CIS income assessed?
Of the 32 lenders we track with published CIS criteria, 22 assess a CIS subcontractor the same way as any other self-employed applicant — on net profit after expenses. 6 instead treat CIS income as gross pay, the same as an employee, and 4 apply their own net-after-expenses adjustment on top.
Where do I find retained profit in my accounts?
On the balance sheet, under "Capital and reserves" — look for "Profit and loss account" (or "Retained earnings"), and use the year-end carried-forward ("c/f") balance, not the "profit for the financial year" shown in the profit and loss account itself, which is only that one year's post-tax profit. It won't show on your SA302.
Information only — not mortgage advice. We are not FCA authorised. Being shown a lender does not mean you will be accepted, and figures shown are conservative estimates, not offers. Always speak to a qualified, FCA-authorised mortgage adviser before applying.
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