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VAT and tax loans

Spread the cost of a large VAT, corporation tax or PAYE bill over a few months, so your cash flow stays steady.

  • Free to use, no obligation
  • £5,000 to £2m+ for UK limited companies and LLPs
  • Matched to a broker who arranges vAT and tax loans
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Free to useNo fees for businesses, ever
About a minuteOne short form, plain English
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What vAT and tax loans are

A VAT or tax loan is a short-term business loan used to pay a tax bill on time and spread the cost over a set period, typically a few months up to around a year. The lender may pay HMRC directly or pay the money to your business to settle the bill. Repayments are usually fixed and monthly, which makes the cost easier to plan for than one large payment.

This type of finance often suits profitable companies whose tax bill falls at an awkward time, such as after a strong year, a large contract or a seasonal peak, when cash has already been committed elsewhere. Paying on time avoids HMRC interest and penalties for late payment. It is worth comparing a tax loan with HMRC’s own Time to Pay arrangements, which may also be available.

What businesses use it for

VAT bills

Pay a quarterly or annual VAT return in full and on time, then spread the cost, which can help after a quarter with unusually high sales.

Corporation tax

Settle a corporation tax bill after a profitable year without draining the cash reserves you need for wages, stock and day-to-day running costs.

PAYE and National Insurance

Cover a PAYE and National Insurance bill, for example after paying bonuses or taking on staff, without delaying other payments the business relies on.

Protecting cash reserves

Keep cash in the business for planned investment or a quieter period, rather than using it all at once to meet a single tax deadline.

How it works

1Share the bill details
You tell the broker what the bill is for, how much it is and when it is due. They will usually ask for recent accounts, bank statements and a copy of the HMRC demand or return.
2Find a suitable lender
The broker approaches lenders who offer short-term tax and VAT loans. Because tax deadlines are fixed, it helps to start early, giving lenders time to make their checks before the bill is due.
3Pay HMRC and repay monthly
If you accept an offer, the lender pays HMRC directly or pays your business so you can settle the bill. You then repay the loan in fixed monthly instalments over the agreed term.

What lenders look at

Every lender has its own criteria, but these are the things they usually check.
The type, amount and due date of the tax bill
Company trading history and recent accounts
Profitability and cash flow shown in bank statements
Credit history of the business and its directors
Any existing arrears or arrangements with HMRC

To use Loanleaf

  • UK limited company or LLP
  • Trading for 6 months or more
  • Annual revenue of £50,000+
  • Borrowing £5,000 or more
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Things to consider

Cost compared with Time to Pay

A tax loan has interest and possibly fees. HMRC may agree a Time to Pay arrangement, which also lets you spread a bill, though HMRC still charges interest on the amount outstanding. Compare both before you decide.

Timing

Lenders need time to assess an application, so leave enough time before the deadline. If you already have arrears with HMRC, fewer lenders may be able to help and the options can be more limited.

Guarantees and planning

Directors are often asked for a personal guarantee. A tax loan helps with one bill, but if tax bills regularly cause pressure, it may be worth reviewing with your accountant how the business sets money aside for them.

VAT and tax loans: questions and answers

What can a tax loan be used for?
It is typically used to pay VAT, corporation tax or PAYE and National Insurance bills. Some lenders also help with other HMRC liabilities. The aim is to settle the bill on time and spread the cost over a set period.
Does the lender pay HMRC directly?
Some do. Others pay the money to your business so you can make the payment yourself. Either way, the loan is repaid to the lender in agreed instalments, usually monthly, over the term you agreed at the start.
How long can I spread the cost?
VAT and tax loans are usually short-term, typically running from a few months up to around 12 months, so repayments can be planned around the next tax period. Some lenders offer longer terms.
Is a tax loan better than HMRC Time to Pay?
It depends on your circumstances. Time to Pay is agreed directly with HMRC and interest is charged on the amount outstanding. A tax loan means HMRC is paid in full on time, but has its own interest and fees. Comparing both is sensible.
Can I get a tax loan if I am already behind with HMRC?
It can be harder, because some lenders only help businesses whose tax affairs are up to date. Others may consider it depending on the amount and circumstances. A broker can tell you which options are realistic.
How can Loanleaf help?
Loanleaf is an introduction service, not a lender or broker, and we don’t give advice. You answer one short form about your company and what you need, and we match you with a specialist finance broker who works with VAT and tax loans. It’s free to use and there’s no obligation to go ahead. The broker will explain any fees of their own.
Ready to compare your options?
One short form. A specialist broker calls you.
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