Spread your VAT bill

Using a VAT loan can help a business spread the cost over manageable repayments to manage their cash flow. 

VAT loans are a great way of spreading the cost of your VAT bill over 3 months to manage the repayments and bridge the gap. Here's how funding your VAT bill generally works:

• Understand VAT Payment Timing:

  • In the UK, businesses are required to collect VAT on sales and remit it to HMRC periodically (e.g. quarterly).

  • However, businesses also incur VAT on their purchases. The time lag between collecting VAT from customers and paying VAT on purchases can create a cash flow challenge.

• Apply for a VAT Loan:

  • Businesses can approach a specialist that understands the loan market and is able to source multiple offers.

  • The application is typically straightforward and the lender requires sight of latest accounts, last 3 month bank statements and a visibility of the HMRC website to demonstrate you are up to date so far with previous tax bills.

• Loan Approval:

  • Once the lender approves the application they will be able to pay HMRC directly thus freeing up the cash for the business. 

  • The loan amount is often structured to cover the anticipated VAT liability and is typically over 3 months to coincide with the quarterly bills.

• Interest and Fees:

  • These are typically charged at a low fixed fee.

  • They will vary slightly depending on the term and perceived risk to the lender. 

• Benefits of VAT Loans:

  • Improved cash flow: VAT loans help businesses maintain a healthy cash flow by providing the necessary funds to meet VAT obligations.

  • Avoidance of penalties: Timely payment of VAT helps businesses avoid penalties and interest charges imposed by tax authorities for late payments.

  • Does not interfere with any other lines of credit. 

  • Quick and competitive offers.

• Considerations:

  • It's essential to choose a reputable advisor and understand the terms and conditions of the loan agreement.

If you would like to discuss how VAT Loans can help your business contact Secure Business Finance on 01483 363011 or email info@securebusinessfinance.co.uk