What is the Construction Industry Scheme and how do lenders consider your income?
Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC).
The deductions count as advance payments towards the subcontractor’s tax and National Insurance.
Many mortgage lenders will look as this income on a self-employed basis and use the net profit after tax.
The good news is we have a number of lenders that will consider applicants using the CIS scheme as employed and use their last 3 months CIS slips as proof of income.
This enables you to borrow considerably more on a mortgage as the lender is using the gross income figure rather than the net figure.
It’s also useful if you have been contracting for a short period of time.