As a business owner with a turnover above £85,000, your business must be VAT registered. Every three months your business will require you to submit a VAT return to HMRC, even if you haven’t got any VAT to pay or reclaim.
Having monthly outgoings such as rent, wages and supplier payments can make it difficult to pay your VAT bill. Therefore, VAT loans are put in place to provide your business with the funds to keep your cash flow steady.
When do you need to pay your VAT off?
Once you have received your VAT bill, HMRC allows five weeks to pay it it from the date it becomes due at the end of each quarter. With other outgoings, as mentioned before, it can be a struggle to pay it off. However, if it is not paid HMRC can act against your business – particularly if it is reoccurring. Therefore, VAT loans are an opportunity for businesses to keep all finances steady whilst invoices are being paid by customers.
What is the VAT loan process?
When applying for a VAT loan with VAT Loans we pay HMRC directly. This takes the pressure off you to have to get that payment made on time. Then, you will have monthly repayments based on your bill, which is required to be paid in three months.
Here is a step by step guide of the process when applying for a VAT loan.
Now having learnt all the basics of ‘what is a VAT loan’, your business can benefit from taking the strain off the business’s cash flow.