Tax is an essential business expense, but cash flow issues can make it hard to meet your tax deadlines. With affordable tax loans from Acorn, you can spread your tax liability over a 6, 10 or 12-month period. Longer term loans may be available for tax in arrears, although interest rates do tend to be higher for historic tax liabilities. The loan can be used to fund income tax, corporation tax, capital gains tax, PAYE/National Insurance, and VAT. We can also help to find the best available rates on Accelerated Payment Notices (APNs), as well as Research and Development (R&D) tax credits.
What is a tax loan?
A tax loan is a form of unsecured business finance, dividing your tax bill into a series of affordable monthly payments.
- Your tax loan can be paid into your bank account, or directly to HMRC
- You can apply for tax loans to fund a variety of different business tax liabilities, from corporation tax to VAT
- You can also apply for a tax loan for your own personal income tax liability
Tax loans can be a useful way to manage your cash flow and manage your business expenses.
Why take out a tax loan for my business?
Using a tax loan to spread the cost of your tax liability makes good business sense if cash flow issues make it difficult to pay on time, in one lump sum.
Tax funding can also allow you to prioritise your spending, keeping cash in reserve to make important investments for your business as the need arises.
With Tax funding being short term, the level of interest that one can expect is reasonable (depending on the strength of the business). The great news is that tax relief is claimed on the interest element of the loan – based on the tax rate that the business is charged.
Currently tax relief on interest can be claimed at 19% for Limited entities, this will go up to 25%, inline with the increased Corporation rate for Limited entities earning over £250,000 in profit from March 2022.
For partnerships & LLP’s, tax relief on loan interest can be claimed at much higher rates (40-50%) dependent on profitability. This makes borrowing for Tax, and utilising the firms own capital, to developing an appetising proposition.
Paying corporation tax with a loan from Acorn Business Finance
Many businesses that we work with take out a tax loan to spread their corporation tax liability. By spreading their liability over the course of a year, they can budget for their tax on a monthly basis which makes it much more manageable from a cash flow perspective.
How much is corporation tax for a limited company?
Corporation tax is set at 19% for all limited companies. You must pay corporation tax on any profits you make from doing business, making investments or selling assets (chargeable gains).
What happens if I can’t pay my corporation tax?
If you are not going to be able to pay your corporation tax on time, it’s important to put a plan in place sooner rather than later. If your corporation tax return is filed late, HMRC will charge a penalty payment – including interest on the unpaid tax.
- Contact HMRC in advance of the deadline. You could ask for a delay to part of your corporation tax payment.
- You can then speak to Acorn about a potential tax loan, by advising HMRC that you are looking at a Tax loan to spread the cost of your liability. This will give them a bit more comfort that you are taking steps to meet your liability, and this generally leads to them granting a short extension to organise funds.
If for any reason we can’t organise a Tax loan you could always look at a time to pay arrangement with the revenue, but we would always advise entering into a payment arrangement plan with the revenue as a last resort.
Is my business eligible for a tax loan?
A tax loan could be the best way to meet your tax liability. At Acorn Business Finance, we’ll consider a tax loan if your business meets the following criteria:
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- Turnover of more than £300,000
- Based in the UK
- Trading for more than 2 years
Paying income tax: Can I get an income tax loan?
If you’re a sole trader, a partner or a director, tax loans can be used to spread the cost of your income tax liability.
- Pay your income tax in a series of fixed monthly payments, over a period of between 6-12 months
- Get a decision about your income tax loan in as little as 24 hours.
Are there any alternatives to a tax loan?
Tax loans are just one form of finance, designed specifically to help with your tax liability. If cash flow is an issue within your business, you might want to consider other business loans. These could include:
- company credit cards
- invoice finance
- asset refinancing
Everyone’s situation is different. At Acorn, we can help you decide which type of finance is right for you.
How Acorn can help
Here at Acorn Business Finance, we understand how important it is to keep cash flowing through your business. We can help reduce the burden of your tax liability, with tax loans to help you spread the cost.
Every business is different, so we will advise you on the best solution for your unique situation. And with our in-depth industry experience, we’ll always aim to secure an acceptance for your business at the best price.
A little bit about us:
- We’re an independently owned commercial finance broker. That means we’re different from other providers. We offer a highly personalised approach with solutions tailored to you.
- We’ll help you get the best loan terms for your business. Thanks to our extensive contact list, we have a large selection of lenders to choose from – many of whom only provide funding through FCA accredited finance brokerages like ourselves.
- We’re not like high street banks. Talk to us about flexible, bespoke finance solutions that you won’t get anywhere else.
- Unlike dealing with your high street bank, we are able to provide a whole of market opinion as to the best solutions, lenders and terms for your specific business.
All we ask for is the opportunity to quote and get to know your business a little better.
Contact us
If you have any questions about tax loans and how to apply, don’t hesitate to contact us.
- Call us on 01242 395507
- Fill in our contact form
- Book a callback at your convenience
Or read more about the other business loans we offer
