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Planning Guide

What to Tell Your Accountant 12 Months Before Buying a House

Your accountant wants to save you tax. Mortgage lenders want to see high income. Here's how to bridge the gap with the right conversations.

Updated January 202610 min read

The Accountant-Mortgage Conflict

There's an inherent tension between what your accountant does and what mortgage lenders need. Understanding this conflict is the first step to managing it.

Your Accountant's Goal

Minimize your tax liability by maximizing allowable expenses and using tax-efficient structures. A lower profit figure means less tax to pay.

Your Lender's Goal

Assess your ability to repay based on sustainable income. A higher profit figure (or income) means you can borrow more.

The result

Left to default settings, your accountant will minimize your income for tax purposes, which inadvertently minimizes your borrowing capacity. You need to actively choose your priority.

When to Have This Conversation

Ideal Timeline

12

12+ months before purchase

Ideal timing. You can influence the upcoming tax year's figures and have time to adjust your strategy if needed.

6

6-12 months before purchase

Still helpful. You may be able to influence current tax year figures, especially around dividend timing and expense claims.

3

3-6 months before purchase

Limited impact. The figures are mostly set, but you can still discuss document preparation and filing timing.

Best timing

The ideal time is 2-3 months before the end of your financial year. This gives you maximum ability to influence that year's figures.

Key Questions to Ask Your Accountant

1. "What income figure will lenders see?"

Ask your accountant to explain exactly what assessable income figure will appear on your SA302 or certified accounts, and how this is calculated.

Why this matters:

You might be surprised how different your "income" looks to a lender vs. what you actually have in the bank.

2. "Which expenses could I defer or reduce?"

Identify which expenses are essential for business operations and which are discretionary or could be timed differently.

Examples of deferrable expenses:

Equipment upgrades, training courses, vehicle costs, home office claims, pension contributions.

3. "What's my optimal dividend strategy?"

For Ltd company directors: discuss how timing and amount of dividend declarations affects your assessable income.

Key considerations:

Dividends declared before your year-end vs. after, retained profits, salary level optimization.

4. "Which lender income method suits my structure?"

Ask your accountant which income calculation method (net profit, salary + dividends, etc.) would present your situation most favorably.

For Ltd companies:

Some lenders use salary + dividends, others salary + share of net profit. The difference can be significant.

5. "Can you provide certified accounts?"

Confirm your accountant can provide certified accounts that lenders will accept, and understand what qualifications they hold.

Accepted qualifications:

ACCA, ICAEW, ICAS, CIMA, and often AAT. Some lenders are stricter than others.

Conversation Script

Here's a sample script for starting the conversation with your accountant:

"I'm planning to apply for a mortgage in [X months]. I know you usually focus on minimizing my tax, which I appreciate, but I need to think about how my income looks to lenders too.

Can we review my situation and discuss:

  • • What income figure lenders would see based on my current accounts?
  • • Whether there are any discretionary expenses I could defer until after my mortgage completes?
  • • The best timing for filing my return and declaring dividends?
  • • Which income calculation method would work best for my business structure?

I understand this might mean paying a bit more tax in the short term, but the increase in borrowing capacity could be worth it."

Discussion Checklist

Use this checklist to track the key topics you need to cover with your accountant:

Accountant Discussion Progress

0/9

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Frequently asked questions