The end of the financial year can be a stressful time for business owners. Not only do the annual accounts need filing, but it’s also when HMRC reminds most companies of their tax deadlines. There have been many changes to tax deadlines, thresholds, and obligations over the last year, mostly relating to new Brexit legislation or Covid-19 support measures. While HMRC has taken steps to help businesses during this turbulent time, VAT and Company Tax Returns must be promptly filed and paid to avoid hefty penalties.
Knowing the importance of these deadlines, most business owners will plan in advance for their tax bills. However, in some cases, the funds simply aren’t available when the time comes, or business owners realize that paying could put pressure on cash reserves required to run the business. With so many legislative reforms in the last 12 months, alongside the ongoing impact of lockdown restrictions, a growing number of small businesses are struggling to cover this year's VAT and tax liabilities.
Funding for VAT and tax payments
The size of a VAT and tax bill can vary by company, but they’re rarely small, and settling with a single payment can create a precarious cash flow situation. With VAT payments typically billed every quarter and corporation tax due annually, it’s vital to stay on top of your financial affairs to avoid mounting penalty charges.
Even a business that’s financially stable can incur a large VAT bill they haven't planned for, especially if there has been a recent change in the supply chain or error with the company books. Without a cash buffer in place, these unexpected payouts can seriously affect a company's financial health. There are also new import VAT charges, tariffs, and customs declarations for businesses that continue trading with the EU bloc after Brexit. These can be daunting to those unfamiliar with the process, leading to errors at border control that are time-consuming and expensive.
What is a VAT loan?
To keep to HMRC’s deadlines without jeopardising cash flow, many businesses decide to borrow the necessary funds, allowing them to pay their bills on time while spreading the cost over several months. There are plenty of lenders that will happily support a company with its tax payments, but they may be reluctant to lend if a tax bill is already overdue. By applying for a loan or overdraft facility well in advance of your due date, there will be less risk of missing your payment and being penalized by HMRC.
As a bank loan is often unattainable for small business owners, many turn to alternative lenders when they need fast, flexible finance to pay an upcoming bill by splitting it into more manageable monthly repayments. If you’re interested in how to apply for a VAT loan to cover your tax obligations, read the key details below.
VAT finance from Fleximize
Fleximize's finance has helped many businesses to spread the cost of tax payments, including SMEs in the retail, hotel, construction, restaurant, and brewing industries. Our fast application process means that you can receive a VAT loan to settle your tax bill in as little as 24 hours. Here are the other perks of Fleximize’s tax finance:
- VAT and tax loans of £5,000 – £500,000
- Competitive interest rates starting from 0.9% per month
- Quick and easy online application with minimum paperwork
- Approval and deposit in as little as 24 hours
- Interest charged on a reducing balance, not the total loan amount
- Top-ups and repayment holidays with all loans
- No hidden fees or early repayment penalties
- Exclusive discounts on industry-leading business services from our B2B partners
We know that securing a loan can be difficult for small businesses and that every company is different. Unlike when applying for a bank loan, Fleximize looks at your company’s credit history as just one factor when assessing eligibility. Therefore, if your company can demonstrate strong financial growth and has been trading for at least six months, you’re more than welcome to apply.
What can I use a VAT loan for?
Our tax funding can be used in various ways to help spread the costs of a tax bill and avoid late payment fines. Whether you’re buying a commercial property, investing in accountancy software, or securing an EU base to better serve your customers outside the UK, Fleximize’s products are designed to fit each business’ needs.
VAT on commercial property
The sale or lease of commercial property is generally exempt from VAT, but there are some circumstances where VAT may be charged. For example, VAT at the standard rate (currently 20%) is applied to transactions where the commercial property involved is less than three years old. A vendor or landlord can also elect to charge VAT if the property has been renovated or refurbished, and they are looking to recover the associated VAT costs.
If you're looking to expand your business with a new commercial property on which VAT is charged, a tax loan from Fleximize could help cover the cost until the VAT can be reclaimed.
VAT deferred payments
To mitigate the impact of lockdown restrictions, businesses could defer VAT payments between March 20th and June 30th 2020. Businesses could either clear the debt by the end of June 2021 or register for the VAT Deferral New Payment Scheme to repay in monthly instalments. All companies, regardless of when they signed up for the scheme, must repay by March 2022. This means the number and size of repayments are determined by the registration date and cannot be tailored to each business. Those signing up close to the deadline of June 21st, for example, will have only eight months to settle in full.
As businesses continue to battle with extended lockdown measures, adhering to the payment plan set out by HMRC may prove difficult. With a VAT loan from Fleximize, you're guaranteed the flexibility needed to comfortably manage your deferred payments, with repayment holidays and top-ups available as standard.
New VAT reverse charge
The new VAT reverse charge for building and construction services came into force in March 2021, requiring that the customer or company receiving services pay any VAT to HMRC directly rather than to the supplier. As with any new regulations, there can be rising costs for small businesses. Whether investing in new accounting software or additional time spent on administrative tasks, adjusting to tax rules can put additional pressure on cash reserves. Furthermore, a major concern for small businesses is the impact on cash flow, as the money usually set aside for VAT is no longer available for emergencies.
Fleximize's VAT business loans can provide a vital cash injection while you adjust to these new ways of working. If you’re looking for quick lending solutions to avoid a cash flow drought, read more about how Fleximize’s products are tailored to SMEs in the construction industry here.
Securing a warehouse
Buying or renting warehouse space to operate as a distribution base within the EU has seemed like an unavoidable expense for ecommerce brands hoping to avoid lengthy port delays and slow fulfilment times. It also helps to postpone VAT bills, as nothing is paid until the goods are sold to the customer. However, leasing or purchasing a warehouse comes at a price, including monthly rental fees, operating expenses, and maintenance costs. In addition, UK businesses must register for VAT in the country they're storing the goods.
With Fleximize, you can get the funding you need to rent or purchase a warehouse abroad, and continue to delight your EU-based clients with speedy service.
Does my business qualify for a tax loan?
Many small businesses can struggle to secure a loan with a traditional lender due to strict lending requirements. Fleximize looks to help as many businesses as possible – providing we think the repayments are affordable and the VAT bill loan will benefit them. Whatever the outcome of your application, you will receive a decision within 24 hours of submitting all of your documents so you can prepare for your business’ future.
Regardless of your size or industry, you can apply with Fleximize if:
- You are a registered limited company or LLP.
- You’re UK-based and at least one director lives in the UK
- You’ve been trading for at least six months
- You have a minimum monthly turnover of £5,000
We can also consider your application if you’re a sole trader or non-limited partnership with less than four partners, and you’re looking for a loan amount of £25,000 or more.
How much will my tax loan cost?
We provide tax bill loans with interest rates from 0.9% per month, and there are no hidden fees. Unlike other lenders, we don’t penalize businesses for repaying their VAT loan ahead of time. Our Penalty-Free Promise means that you can pay less interest overall by settling early without any extra charges.
If you’d like an estimate of what your tax loan could cost before applying, you can use our business loan calculator to instantly find out what your repayments could look like, including the potential savings if you settled early. If you’d rather receive a tailored quote for your business, call us on 020 7100 0110.
Why choose Fleximize as your tax loan provider?
When it comes to business finance, you need a lender you can trust. And when it comes to paying your VAT bill, loans from alternative finance providers such as Fleximize can offer you the speed and flexibility your business requires. Read on to learn what to expect when you apply for a business VAT loan with Fleximize:
- We’re hassle-free: You can apply in just a few minutes using our simple online application and receive the funds in as little as 24 hours.
- We’re flexible: We offer unsecured and secured options, along with top-ups, repayment holidays, and our Penalty-Free Promise so you can get business finance that fits with you.
- We’re personal: You’ll be assigned a dedicated relationship manager to answer any questions during your application and make sure your VAT loan is fully tailored to your business' specific needs. If you return for another round of funding in the future, you’ll be welcomed by the same point of contact.
- We’re loved by customers: Our ‘excellent’ Trustpilot rating and customer case studies reveal just how highly our clients value us. We were also voted Best Business Finance Provider at the British Bank Awards by our customers, twice. You can learn more about our awards here.
How to apply for VAT finance
Ready to apply? Just complete our short online form to get started. If you pass our initial checks, a member of the Fleximize team will be in touch to take you through the final stages. Once we’ve received everything we need, you could be approved and receive your funds on the same day.
Got more questions about our VAT finance and tax loans? Check our FAQs or give us a call on 020 7100 0110.