Finance to pay a tax or VAT bill

January and April are both times when a lot of your business bills become due as a business owner, and the taxman is coming down hard on firms who owe money to HMRC. It’s the businesses who aren’t aware of their options that are suffering the most, but all is not lost if your business finds itself late paying tax. Read on to find out how you can finance a tax or VAT bill.

It's a familiar feeling for business owners all over the country: you discover a tax bill is due and realise you don't have enough working capital set aside to pay for it. But there's lots of ways you can fund a tax bill and cope with HMRC arrears — and using a tax bill loan is an increasingly common way to stay safe and be prepared for the next set of payments.

Don't delay, just pay

HMRC has escalated business winding-up orders and liquidations, and we always remind businesses of the dangers of putting off paying a tax bill. Given the inconsistent nature of the way tax is chased, we frequently see businesses waiting until reminder letters are sent, but it's wise to have a plan in place long before any contact is made by HMRC — for example, a business overdraft alternative that can be dipped into in times of need.

One of the main reasons is that lenders may refuse to lend to you with an outstanding tax bill — which means the situation can quickly spiral out of control. It can be very risky playing chicken with HMRC, and the result could be more than just a slap on the wrist. It might be a threat to the existence of the business itself.

Finance for HMRC tax bills

We all know paying off tax bills takes a huge chunk out of your coffers, and it's never something business owners look forward to. However, it's important to be able to comfortably manage these payments year-on-year (or quarter-on-quarter), whilst maintaining a comfortable level of working capital so you can keep your business ticking over.

There's a huge assortment of tax finance options that have been created to help you maintain healthy levels of cashflow at all times. Although all good business owners are aware of their duty to HMRC, sometimes it’s difficult to predict when you’ll have a shortfall. Here are some of the situations you might want to finance:

Quarterly VAT

If you're preparing for your quarterly VAT return and owe VAT to HMRC, it’s an important obligation of the business. Plan ahead to ensure there is sufficient cash in the business if you owe such VAT payments. If things didn't go to plan, don't worry — VAT financing is a dependable source of cash.

Corporation tax

If your business is a limited company, you'll pay tax once a year. Because it's retrospectively paid, it's easy to get caught out if you haven't been putting enough aside throughout the year. You'll need to check your accounting year, because that determines when the annual tax is owed.


If you are due to make your PAYE soon, this is as good a time as any to sit back and assess the working capital available in the business for these payments. Christmas also represents a particularly tricky payroll period, as most companies bring forward payday and pay staff wages early.

Quarterly rent

Does your business lease premises? Many small businesses are due to pay their rents quarterly — but less frequent payments means it's a bigger lump sum out of your business bank account when the bill is due.

Other unforeseen bills

It may be the case that overheads you didn’t expect have arrived at your door with an urgent payment date. Or, perhaps your creditors are demanding payment sooner than previously negotiated. These are all common business circumstances that place lots of viable companies in challenging situations, particularly if the creditor is HMRC after building up arrears.

January and the New Year

In January, businesses can experience all of the above — quarterly VAT bills and rent are due, staff have been paid early, and customers are paying invoices late because everyone goes on holiday over Christmas. There's a range of finance that can help, whether it's a short-term business loan, a bridging loan, an overdraft alternative or another type of cash flow finance.

Put simply, there's steps you can take to finance a VAT bill or other debt with HMRC — and it doesn't have to sink your business.

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