Despite what it sounds like an SA302 is not the latest Russian fighter-jet or a secret military intelligence unit. It's a tax statement/form issued by HMRC that provides evidence of your self-employed income (income that is not earned within the PAYE system).
It’s commonly used, and requested, by mortgage companies and business loan lenders to assess the state of your income and creditworthiness. I.e. it proves that you have the financial means to repay the money they may lend you.
What information does an SA302 contain?
An SA302 ‘Tax Calculation’ form is a detailed breakdown of your income, as well as other information about your Self Assessment such as:
- Earnings from employment
- Income from self-employment
- Revenue generated from property and land in the UK
- Dividends obtained from company shares
- Information on UK pensions and received benefits
You can see this in this example copy of an SA302 form.
An SA302 tax calculation is not to be confused with the similar ‘Tax Year Overview’.
The SA302 and Tax Year Overview both present a summary of your total income and tax for a specific tax year as reported to HMRC. But the SA302 is a more comprehensive document, encompassing complete tax calculations for the year.
In contrast, the Tax Year Overview provides a summary of the totals from your tax return and records the payments made to HMRC. You might need your Tax Year Overview for a mortgage if you file your tax return with an accountant that uses commercial software - which is a very good idea!
How to get your SA302 form
After you have submitted your Self Assessment tax return, you can obtain evidence of your earnings (in the form of an SA302) for the past 4 years from HMRC.
If you submit a self assessment tax return online you can access and print your SA302 yourself after 72 hours of doing so from the HMRC website.
Simply login into your HMRC account, open ‘Self Assessment’; then ‘More Self Assessment Details’; then ‘Get Your SA302 Tax Calculation’. Go to your SA302 and select ‘Print Your Full Calculation.’
On the left-hand menu click 'Tax Return Options to print your SA302 from other tax years. Select the year you want; select ‘check your calculation’; then select ‘View and Print Your Calculation’.
If you use an accountant that employs specialised software to process your tax return, you will need to use the same software to print out your SA302 tax calculation. Note that this feature may be labelled differently within the software, such as 'Calculation Result'.
*You’re still able to print a Tax Year Overview from your HMRC online account if you use an accountant with 3rd party commercial software.
If you submitted your tax return in paper form, you will receive your SA302 automatically via mail delivery.
If you lose your SA302 form, contact the HMRC helpline on 0300 200 3310. You will need your UTR and National Insurance numbers. Once they verify your details, you’ll be sent a new copy by post.
Why do I need an SA302?
Before a mortgage lender or bank/financier offering business loans agree to lend a client money, they need to verify that the loanee’s finances are sufficient, stable and secure. In order to be confident that they can make reliable and timely repayments.
For self-employed people, presenting evidence of their income can be difficult. As it often comes from multiple streams. And as they don’t get a simple payslip this often makes the picture of their overall earnings a bit unclear, or murky in some cases.
So the SA302 provides a clear and tangible document that lenders can use to assess a loan/mortgage candidate’s financial situation with transparency and accuracy. It makes applications for finance much easier and less complicated for both parties.
One potential obstacle you may encounter is that not every lender will accept a printed SA302 form. You can check this list to see which companies do.
When you might need the Tax Year Overview
When an accountant uses third-party software to submit your tax return, they provide you with an SA302.
However, since this SA302 isn't generated from HMRC's website, lenders often require additional verification to ensure the figures match those filed with HMRC.
In such cases, a Tax Year Overview is necessary. It serves as a verification document to confirm the accuracy of the SA302 provided by the accountant, especially when HMRC's website doesn't have a copy of the SA302.
Can I get a mortgage without an SA302?
While an SA302 is a crucial document for self-employed individuals seeking a mortgage, obtaining a mortgage without one is possible. Lenders primarily use the SA302 to verify income and tax details, but some are flexible with their requirements.
Instead of an SA302, alternative documentation such as bank statements, profit and loss accounts, or an accountant's certificate can suffice. These alternatives offer lenders a different view of your financial stability and income regularity.
It's essential to check with individual lenders as their requirements can vary. Some may accept a combination of these documents, while others might have specific preferences or additional criteria.
Mastering Self-Employed Financial Documentation
It's always advisable to prepare a comprehensive financial profile, showcasing your income and financial stability through various means, to strengthen your mortgage application.
The SA302 form is a vital document for self-employed individuals, serving as a key indicator of financial health for mortgage and business loan applications. While it offers a comprehensive overview of one's income and tax details, alternatives exist for those who might not have this form.
Understanding both the SA302 and Tax Year Overview, as well as knowing the various document options lenders accept, empowers self-employed individuals to effectively showcase their financial capabilities.
Although it may sound like yet another enigmatic piece of cryptic tax bureaucracy from HMRC, it’s actually very useful and logical. Making securing loans and mortgages more accessible and straightforward.