IR35 changes in April impacted the setup between many contractors and their clients, and an increasing number of daily rate contractors are now paid via an umbrella company.

Virgin Money and Clydesdale Bank have both introduced policy to make sure that there is a clear lending solution for contractors impacted by IR35 or using an umbrella company seeking a mortgage.

The changes see Virgin Money and Clydesdale Bank lend to contractors who fall inside IR35 and contractors paid via an umbrella are now acceptable.

Where a contractor is paid via an umbrella the applicant must provide their last two months payslips where the gross pay is taken into account, after deduction of statutory employer costs (like employer NI and Apprenticeship Levy) and payroll service costs.

Other complex contractor situations will be assessed manually by an underwriter and considered on an individual case by case basis.

Sarah Green, head of customer acquisition at Virgin Money, said: “As a bank we understand that contractors need mortgage products that are flexible enough to accommodate their professional and financial situations and that is why, following the IR35 changes we have made these positive amendments to our lending policy.”