Typically the first time someone hears about an SA302 is when a potential mortgage lender asks to see them.
What is an SA302?
An SA302 is a summary of all your personal income for any given tax year, as produced by HMRC. HMRC will only be able to send you one for a period where you’ve submitted a personal tax return, as it’s effectively them giving back information you/your accountant have already provided to them.
Why do lenders like SA302s?
Whether or not you get a loan is typically based at least in part on whether the lender feels you can meet the monthly repayments. Your income is a good way of assessing that. When people want to borrow lots of money (eg to buy their dream home), they have an incentive to inflate their income.
When submitting tax returns, typically there’s the opposite incentive. Tax bills are based on earnings, so where there’s flexibility, people will try to make their income look as low as possible. The lender seeing this figure should therefore give them a prudent view.
Lenders will probably want to see SA302s for the last 2-3 tax years. Obviously whether this is feasible or not depends upon how long you’ve been doing personal tax returns, and how up to date you are with them.
How do I get an SA302?
If you submit your personal tax return for a year using HMRC’s online tools, you should be able to download that year’s SA302 from your portal login.
Most personal tax returns will be submitted via third party commercial software. Unfortunately this means you can’t currently access the SA302 online. The only way to get them (at time of writing) is to give HMRC a call on 0300 200 3310, answer the inevitable security questions, and ask them to be posted out to you. This typically take a couple of weeks, so makes sense to ask for these before/in the early stages of house hunting.
Can’t my accountant provide a reference?
Yes…but different lenders ask for different things. Some will insist upon SA302s whilst others will have their own bespoke forms for your accountant to complete (which often have ridiculous questions…but that’s another story).
Depending upon the software your accountant uses they can probably provide you with an unofficial SA302 for any year they’ve done a tax return, though the lender will likely want to see one directly from HMRC (on HMRC letterhead etc). Reason being it’d be easy enough to use software to draft a return with very high earnings, print the SA302, then revise the earnings down to more realistic figures and submit.
From my perspective as an accountant, it makes sense for lenders to have a common set of info requested to decide whether or not they want to lend. SA302s are as good as any, and if HMRC would enable them to be downloaded online for tax returns submitted via third party software, it could become a fairly painless exercise.