Inside IR35, the engagement is taxed like employment. The total gross pay on the payslip is what is typically used, as this is the amount awarded after the umbrella or payroll company has taken its cut. The annual income used for the mortgage is an annualised calculation of the gross payslip figures.
The income used is usually that total gross pay, whatever headings it sits under. Basic pay, additional taxable pay and holiday pay can all be included. All other deductions on the payslip do not typically impact the loan outcome.
The calculator on this site uses the day rate on the contract. Because the payslip gross is usually lower, the maximum loan is often lower than the calculator. This is a general description. It is not a fixed percentage taken off the day rate, and it is not a promise that every lender works this way.
What we usually need
- The current contract or assignment, with the day rate and the end date.
- How long you have been contracting, including earlier contracts to cover the last 12 months.
- Recent umbrella or agency payslips, so the total gross pay is visible.
- Recent bank statements showing income credits from your payroll or umbrella company.
The day rate on this site
The calculator is an illustration of the contract rate. It is not a promise of the figure a lender will use. Time between contracts and the lender’s own method can both change it.
A first contract inside IR35 can be looked at. So can a move from a limited company onto an umbrella. A partner on a salary, or on their own contract, can be included. None of that is an agreement in principle.