A VAT loan is business borrowing used to fund a VAT bill. The company repays the lender under an agreed schedule, with interest and any applicable fees. It changes how the business finances the payment; it does not reduce the VAT owed or change the filing deadline.
“VAT finance” and “VAT funding” are also used to describe this type of borrowing. VAT Loans arranges finance for UK limited companies, subject to status, affordability and lender approval.
When might VAT finance help?
A company may have a VAT bill due before customers pay their invoices, or need to keep some cash available for wages and suppliers. Borrowing can bridge a temporary gap if the company can afford the repayments. It can add pressure when there is an ongoing shortage of cash, so compare the repayment schedule with your forecast before applying.
Does a VAT loan pay the tax for me?
The lender’s payment process will be confirmed during the application. Funds may be paid directly to HMRC, but the business must still submit accurate returns and check that payment reaches the correct account in time. Finance approval is separate from meeting those obligations.
When is the VAT bill due?
For most online VAT returns, the return and payment deadline is one calendar month and seven days after the accounting period ends. Different arrangements can apply, including some VAT accounting schemes. Check your VAT account and HMRC’s return and payment guidance for your actual deadline.
What does a VAT loan cost?
The cost depends on the offer: compare interest, fees, the repayment dates and the total amount repayable. Start with the VAT loan calculator and cost checklist, then request a written quotation before deciding. No VAT is charged on the loan or its repayments: Is there VAT on loans? explains why.
What alternatives should I compare?
Consider available cash and existing borrowing facilities. If the company cannot pay HMRC, explore Time to Pay and speak to an accountant about the wider cash-flow position. Choose an option the company can afford, rather than assuming finance is always the answer.
Read how the VAT loan process works or check VAT loan eligibility.
Contact Us
For more information on what is a VAT loan 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].