Working outside IR35 through your own limited company means the gross contract value arrives in your company and you control what you draw. Good for tax, poor for a mortgage — unless you use a lender that reads the contract rather than the accounts.
Placed correctly, an outside-IR35 contractor is often assessed on the highest income figure available anywhere in the market: the full gross day rate, before deductions. £700 a day over 46 weeks is £161,000. The same contractor drawing £12,570 salary and £50,000 dividends would be assessed at £62,570.
Get both signatures before applying.
Rates stated per hour but annualised per day, or the reverse.
Long single-client engagements queried as disguised employment.
A recent inside-to-outside IR35 move, or fixed-fee contracts with no daily rate stated.
Some lenders will annualise a fixed contract value rather than a daily rate, and most will work from an hourly rate over a stated number of hours. Both are less common than day-rate assessment and reduce the lender list, so the contract wording is worth checking before you sign.
Where a fixed fee is used, lenders usually divide it by the days or hours it covers to work out an equivalent rate, then apply their normal multiplier. This method is less widely offered, so it’s worth checking with a broker which lenders can accommodate it.
Situation: Outside IR35, nine months into contracting, drawing minimal income.
Approach: Gross rate annualised at £172,500 with a lender accepting six months’ history.
Outcome: £640,000 at 80% LTV.
Situation: Contract stated a total project fee, not a day rate, which two lenders would not annualise.
Approach: A lender that assesses total contract value over the contract term.
Outcome: £380,000 agreed.
Situation: High rate but a modest deposit, which removed several contractor-friendly lenders.
Approach: A lender combining gross-rate assessment with an enhanced income multiple above a set income threshold.
Outcome: £720,000 agreed.
Send us your signed contract. We will confirm which lenders will annualise the gross rate and what your realistic maximum borrowing looks like.
Very rarely. Lenders underwrite contracts and payment flows rather than tax status, so the determination itself is not usually requested.
No. Substitution clauses matter for IR35 purposes but not for mortgage underwriting.
Some lenders will annualise the total contract value over its term. It is less common than day-rate assessment and reduces the number of options.
It is usually fine, but some underwriters query long single-client engagements. It is worth explaining the arrangement in the application.
£700 a day annualises to around £161,000 over 46 weeks, which at typical multiples points to roughly £725,000 to £885,000 before commitments and affordability testing.
