Pepper Money has made changes to its criteria for self-employed borrowers and will now use the latest year’s net income in affordability calculations.

Previously, the specialist lender used average net income for the last two years in its affordability assessment and it argues this change will benefit business owners, entrepreneurs and sole traders who have seen their income increase in the last year.

Earlier this year Pepper announced that it would accept additional income considerations, including expenses add-backs, directors’ car allowance, directors’ pension contributions, use of home as office and private health insurance.

Rob Barnard, sales director at Pepper Money, said: “The growth of self-employment shows no sign of slowing with more than 4.8 million people self-employed at the end of 2017.

“For the owners of growing businesses, the ability to use latest year’s net income, rather than an average of previous years can make a significant difference to how much they can borrow.

“With this latest enhancement to our criteria and the improvements we made earlier in the year, Pepper has become a much more interesting choice for your self-employed clients.”