Throughout this blog I will be breaking down a list of VAT finance lenders across the UK. VAT finance is a specialist form of lending that companies in the UK use to fund quarterly HMRC VAT bills. Historically, it was mainly professions such as solicitors, accountants, and architects that would finance VAT. Today, all sorts of UK companies fund their VAT for a whole variety of reasons.

So where do you find a list of VAT finance lenders in the UK?

VAT Loans are a key finance company in the UK, funding VAT for our clients. We have searched for such a list and as far as we can see, there is no definitive list of VAT finance lenders out there.

However, luckily for you, we have independently compiled a list of UK VAT Finance lenders from a deep dive on Google. Hopefully this blog will be helpful to those seeking VAT funding exploring their options. So, let’s get into it, we can split the list into two parts.

Funders

Firstly, there are the funders, the actual finance companies that lend the money.

Premium Credit Limited is by far the largest company operating in this space. They call themselves ‘The number one premium finance company in the UK and Ireland.’ With 2.1m customers and processing 24 million direct debits per year, we as an independent company will agree, they are the largest. Please note, only a small fraction of their business is VAT funding, most of the other funding is for insurance premiums, golf club memberships, school fees, train season tickets etc. It maybe such you already deal with them on the insurance side or in a personal capacity. However, contacting them for VAT funding will be more challenging, it is a lot easier to go via a broker such as ourselves.

There are other funders in the market such as Shawbrook, White Oak, Federal Capital, Time Finance, who fund VAT. Again, some of these companies will not deal with an end user directly. For those that do, it can sometimes be a bit challenging to navigate around who to speak to and how to deal with them.

Brokers

Secondly, there are brokers (the middle men) that offer VAT funding.

VAT Loans have scoured the market analysing who is our competition on Google and have stumbled across 23 other companies. Three of these seem to be ‘internet only’ business types. Although, they would much rather be referred to as ‘Fintech’ companies. In summary, great websites, but lacking that personal touch of human interaction. We have not checked their accounts, but as a guess, they will be losing money.

All the others are brokers who advertise the fact they offer VAT funding for UK companies. We have individually reviewed all these companies. On average, they employ between two and ten people and offer a range of finance facilities for companies. For the record, they all seem decent companies, many of them have been trading for a long time. So that’s always promising.

Competitive HMRC VAT funding UK

The market for VAT funding in the UK is competitive. As you can see above, anyone can put ‘VAT Loans’ into Google and up comes a list of companies that will help you. And from what we can see, most companies are offering competitive repayment terms.

Another thing to bear in mind as a customer is that our funding partners limit how much we can earn in commission. In summary, all of us intermediary brokers are swimming in the same pool trying to win the same business. We all have to be competitive. And there is nothing wrong with a bit of healthy competition.

Best UK VAT funder?

Stating who is the best UK VAT funder is very difficult. Rates are competitive, loan agreements are often worded the same. From what we see, there are only two differentiators:

1. Credit acceptance – this is where one funder rejects a deal and another one accepts it. Having a wider panel of UK VAT funders does help.
2. Whilst some people are happy and content just to undertake business via email, other companies – especially those new to funding VAT – will wish for some more human interaction.

We cannot comment on other UK HMRC VAT funding companies with regards to their level of service. However, what we can say is that to our customers, service level is of paramount importance.

1. Phone conversations are important. We must answer the phone and not just communicate via a chat facility or email.
2. Speed and urgency are the number one priority. Most of our business comes in the third week of the month. We then have to arrange credit, send out documents, and get HMRC paid by the 7^th of the following month. (Over 50% of our clients will leave their VAT funding to the last minute.)
3. Understanding the process and ensuring that a VAT loan is put in place quickly is often at the top of a clients’ agenda. Having the detailed knowledge from doing many VAT loan deals in the past does help. Interestingly, when we look at our 23 competitors, most of the smaller independently owned companies do have the in-depth knowledge. We have not tested the ‘fintech’ companies, but our gut feel is they will not have a great a knowledge pool compared to the likes of us.

We hope this blog proves useful to you in your decision making. Should you have any questions on the VAT loan process, creditworthiness, or anything else, we would be happy to help. Please don’t hesitate to get in touch, give us a call on 01494 611 456. Or send an email to [email protected]. Or, if you have any questions about VAT in general, you can always visit the HMRC  website here.

What is a HMRC VAT loan?

A HMRC VAT loan is a specific form of financing for a VAT bill. There are a few key elements to a VAT Loan Interest Rate and a VAT loan that make it different from other forms of funding:

The loan principle is paid directly to HMRC (in the majority of cases)

The loan is short term, normally three months

Why would a UK company apply for a VAT loan?

UK companies use VAT loans when they know they have a VAT bill to pay on a specific date. Also when they wish to spread the expense over the following three months. There are many positive reasons why a company would do this. Interestingly, most companies who need a VAT loan are doing well. Often VAT loans are needed when there is a miss-match between purchase and sales invoices or clients have not paid. Asking for a VAT loan by no means indicates there is any financial danger to the company.

How are the repayments made to the VAT funder?

Nearly all of the VAT loans we write are on what we call a 0+3 repayment basis. No deposit followed by three monthly payments.

Example: If we pay HMRC on the 5th February for the VAT period October through to the end of December, the loan repayments would have the first payment being in March.

This is different and slightly more expensive than making the repayments on a 1+2 basis, first payment being in February.

Using a 1+2 monthly repayment structure means you are only borrowing 2/3 of the VAT bill and making the final payment one month earlier.

Always be careful when comparing VAT loans and what interest you are paying, it maybe you are not comparing like with like.

What is the VAT loan interest?

Lets look at two examples of a £10,000 and £100,000 VAT loan.

In summary, we work on a 0+3 monthly loan repayment basis. Secondly, the larger the loan, the cheaper the interest rate.

VAT Bill Monthly Repayment      Total Repayment             Monthly Interest

£10,000.00           £3,616.67             £10,850.00           £283.34

£100,000              £35,416.67           £106,250.00        £2,083.34

Contact Us

For more information on VAT Loan Interest Rate or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on [email protected].

Once you have registered for VAT, you have to submit a VAT return on either a monthly or quarterly basis. The vast majority of UK SME companies will submit their VAT return per quarter as opposed to monthly, purely from an administration perspective. Below is a bit more on when does a UK company have to pay a VAT bill?

You can choose when you would like your VAT quarter to start and end. Most UK SME companies will run their VAT quarter in line with their financial year end.

HMRC then gives you one month and 7 days from your quarter end to submit your VAT return and pay your bill. You do not have to wait until the end of this time and many companies will submit and pay their bill earlier. For those companies looking to submit a VAT repayment, they often do their best to have the VAT return in as quick as possible.

Looking at the example of a December 31st quarter end, your key VAT dates are as follows:

Q1          January, February, March                   VAT return to be submitted by the 7th May

Q2          April, May, June                                    VAT return to be submitted by the 7th August

Q3          July, August, September                      VAT return to be submitted by the 7th November

Q4          October, November, December         VAT return to be submitted by the 7th February

I am VAT registered and have made no purchases or sales this quarter. Do we have to submit a VAT return?

Yes, you will need to submit a return regardless. However, please note, if your sales drop to under £85,000.00 in any 30 day period and this will be the norm, you could look to deregister for VAT.

How do we pay the VAT bill?

You will ether pay HMRC by bank transfer or alternately via direct debit. You could send a cheque or have a cheque paid into a bank. However, you will need to ensure it is cleared in time.

Advice on HMRC VAT

For many UK companies, VAT is a relatively straight forward subject. However, it can quickly become complex when you take into account flat rate VAT, cash accounting scheme or annual accounting scheme. You then have different rates of VAT, standard, reduced and zero rates.

Add in Zero rated and VAT Exempt and what you can reclaim VAT on. For example entertainment costs is a no, so the whole subject becomes an area where you might need expert advice.

If ever in doubt, make sure you speak to an accountant.

Spread the Cost of your VAT

Contact Us

For more information on when does a UK company have to pay a VAT bill or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871. Or email us on [email protected].

Here at VAT Loans we have loans to pay VAT that have pre-approval in minutes and a decision in 24 hours. No messing around here!

We went onto a VAT funding competitors’ website the other day, advertising “pre-approval in minutes.” I put in our company name, VAT funding needed, my name, email address and mobile phone number. I pressed “submit” only to see the second page asking me to upload my bank statements and management accounts.

However, all I wanted was to know:

What is the cost?

Will I get cleared for credit?

So lets stop this messing round. If you are looking for VAT funding and just want to know what the cost will be, use our VAT loan calculator. We will never know who you are because we do not ask for contact information.

So how do we get a VAT funding pre-approval in minutes?

All we need is your company name and the value of the VAT bill. Using company credit information, we will take a quick look at your business. This does NOT therefore leave a credit footprint; the credit check is done in total confidence.

We have been lending money for thirty years. Our team are trained in credit underwriting. Hence, we will give you a good idea as to whether we can arrange the VAT funding facility or not.

Looking for loans to pay VAT bills for the first time?

VAT funding is a massive business in the UK. There are multinational companies borrowing £10m for three months and business’s funding £5,000.00. The main reason why VAT funding has grown so much over the last few years is that we can fund all sorts of UK companies. However, historically, VAT funding was mostly being offered only to accountants, solicitors and architects.

Scaffolding, construction, engineering, distribution, IT, media, these are just some of the sectors that are using VAT funding on a regular basis. Please do not be put off if you are looking for funding for the first time. We will help guide you through the process, which is quick and simple

If you have used VAT funding in the past

In principle you will understand the process and know the documentation is therefore simple and easy to understand. The key thing is – from what our customers tell us – competitiveness, pricing and service delivery.

Please compare our repayment numbers to your incumbent provider. Therefore, we are confident that our VAT funding pricing is more competitive than most other companies offering a similar product.

Contact Us

For more information on loans to pay VAT or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on [email protected].

Many UK business owners dread that time every quarter when the VAT bill falls due. It’s that lump sum of money which for many companies has aided cash flow in the previous three months and now needs to be turned over to HMRC. Ironically, for many companies, the more VAT you pay to HMRC, the better your business is doing. Below are Top 10 Tips for VAT business loans and funding:

1. Keep cash aside in a separate bank account to cover HMRC tax payments

It’s such a simple idea why does not every company do it? Every month work out what VAT and Corporation Tax needs to be paid and save the money in a separate bank account.

Business owners say they “have put money aside” but few if any hold a separate tax bank account.

So rather than this being a tip, our tip is to calculate your monthly VAT payment and keep a running total of what cash you need to pay the VAT bill.

2. Pay HMRC every month

Now this is a much better idea. HMRC run different bank accounts for PAYE and VAT. There is nothing stopping you working out your monthly VAT owing and then sending HMRC a bank transfer every month. There are some great benefits to this, and the only downside is the loss of interest you would have had on holding the money.

3. Submit your VAT return as quickly as possible

If you are looking for a VAT reclaim, then it is important – for your cash flow – to submit the VAT return as quickly as possible.

If you have to pay VAT over, then there is nothing stopping you completing the return ASAP as well. Regardless as to when the return goes in, you still have one month and 7 days to pay the money from the date of your quarter end.

The VAT bill will have to be paid. Understanding exactly what your VAT bill is early on helps you plan how you will pay it.

4. Borrowing money is cheaper than paying a HMRC fine

HMRC VAT late payment fines and rates are clearly documented on the www.gov.uk website. Those brown envelopes – which arrive through the letter box of thousands of companies every month – always have the sting in the tail of the fine, up to 15% of your VAT liability.

Taking out a loan, is usually significantly cheaper than paying a fine.

5. Think about when you raise a sales invoice

We tend to stop raising sales invoices of any significant value at the end of a VAT quarter. We delay these invoices for a week or so, hence pushing forward the VAT element for a further three months.

6. Always pay HMRC some money

If you do not have the money to pay the bill, then this will incur a fine from HMRC. It will start a process most of us would prefer not to go through. Pay them something, show willingness. It will not change a fine but may help when it comes to how HMRC deal with your case.

If you do decide to go down this route, tell HMRC as soon as possible what is going on.

7. Do not use your bank for a short-term business overdraft or overdraft extension.

High Street banks will often charge a 1% fee for arranging an overdraft even if the need is only for 30 days. Leaving that aside, you need to understand how often your bank can aid you with an informal overdraft. HSBC for example, limit some companies to only four overdraft extensions per year.

8. Use a specialist VAT loan funder for part or all the VAT debt

If you owe HMRC £50,000 in VAT and have £25,000 spare, just look for a £25,000 VAT business loan over three months. You do not need to fund the full amount.

9. Do not go to your normal sources of finance

Keep your bank, your friends/family and other finance providers facilities available for other business loans and funding. As soon as you start using an existing contact for a VAT business loan, they cannot be used for other requirements you might have.

10. Start the process of getting a VAT business loan today!

We look to get our customers credit approved within 24 hours and paperwork can be emailed over very quickly. We have instances where from an initial VAT business loan conversation to having HMRC being paid by clear funds takes less than four days.

It’s always best to get the credit acceptance in place and paperwork signed. Even if you sign the document a month early, the payment will be delayed until nearer the due date. Hence pushing back the first repayment date.

Contact Us

For more information on top 10 tips for VAT business loans and funding or for a free no obligation quote, please give a member of the VAT Loans team a call on 01494 956 871 or email us on [email protected].