VAT and tax funding

What it is

Tax funding is a short-term facility that pays your tax bill so you can repay it in instalments. Instead of a single quarterly VAT hit or a chunky Corporation Tax payment draining the account, you keep the cash working and pay the lender back over a few months. It is one of the simplest products we introduce, because the amount and the deadline are both known.

What it can cover

Why businesses use it

The point is keeping cash in the business. Take a typical, illustrative case: a wholesaler whose VAT bill lands the same week as a big stock order, every quarter. Funding the VAT means they can place the order and pay HMRC over the following months rather than choosing between the two. That is the typical case: a healthy business with lumpy timing, not a business in trouble.

The HMRC alternative

Before you borrow, it is worth knowing HMRC offers a Time to Pay arrangement that can let you spread a bill directly, sometimes more cheaply than a loan. It is not always available and it can affect how HMRC views you, but for some businesses it is the better route. We would rather point you there than sell you funding you do not need.

What a tax facility costs, in numbers

Tax facilities are short by design, so the pound cost matters more than the annual rate. At £10,000 there are 30 lenders on our panel with a product covering the amount, at £50,000 there are 47, and at £100,000 there are 45, with median published floors of 21.3%, 17% and 15.3% a year respectively (checked September 2026). Spread a £20,000 VAT bill over three months and the interest is a small fraction of an annual figure; spread it over twenty-four and it is not.

Trading history is the gate that catches new companies at exactly the moment their first big VAT bill arrives. 21 of our 55 unsecured lenders will look at a business trading under a year and 5 will look at a genuine start-up (checked September 2026). A business in its fourth quarter with one filed return has fewer routes than the same business a year later, which is an argument for asking early rather than on the deadline.

Not every tax problem is a borrowing problem. Where the VAT you are struggling with is the VAT on equipment you are buying, 25 of our asset finance lenders will defer that element rather than expecting it on day one, so the cash requirement at the point of purchase drops by roughly a fifth (checked September 2026). Where the problem is corporation tax on a good year, the useful conversation is with your accountant about payment timing before it is with us about a loan.

Terms are short and the field narrows at both ends. Across the panel, unsecured terms run from 1 to 72 months at £25,000 and out to 120 months at £100,000, with published rate ceilings reaching 70.8% (checked September 2026). Most tax facilities we place sit in the three to twelve month band, which is where the pound cost stays small enough to be worth it.

Corporation tax and PAYE behave differently to VAT and it is worth separating them. VAT is money you have collected on HMRC's behalf, so a VAT shortfall usually means the cash went somewhere else, and the fix is as much about ring-fencing as it is about funding. Corporation tax is a share of profit already earned and sits on a different deadline. PAYE is the one HMRC treats most seriously of the three. A facility that clears all of them at once and leaves nothing behind for the next quarter has solved the symptom.

How it works

Common questions

Sources

• GOV.UK, if you cannot pay your tax bill on time (Time to Pay)
• GOV.UK, VAT payment deadlines
• GOV.UK, Corporation Tax
• FCA, consumer credit and business lending