Spread the cost of a tax bill
VAT Loans and Tax Loans
VAT and tax loans are short-term loans that pay a VAT, corporation tax or other HMRC bill in full and let you repay the lender over a few months. They protect your cash flow and help you avoid HMRC late payment penalties and interest.
Funding Plus compares VAT and tax loans from specialist lenders, often paid directly to HMRC before your deadline.
- Pay HMRC on time
- Spread the cost over 3 to 12 months
- Quick decisions before your deadline
Reviewed by the Funding Plus team · Last updated October 2026
Step 1 of 3 · VAT and Tax Loans
How much do you need?
Takes about a minute. No impact on your credit score.
VAT and Tax Loans at a Glance
- Amounts
- £5k – £1m+
- Terms
- 3 – 12 months
- Decision
- 1 – 5 days
- Security
- Usually none
- Best for
- Quarterly VAT, corporation tax
Typical figures across the market. Your offers depend on your business, the lender and the security available.
How VAT and Tax Loans Work
- 1Share your tax billThe amount, the type of tax and the payment deadline.
- 2Get an offerLenders confirm the monthly repayment and total cost.
- 3HMRC is paidMany lenders pay HMRC directly, so the bill is settled on time.
- 4Repay monthlyYou repay the lender in fixed instalments, often lined up with your next VAT quarter.
How Much Do VAT and Tax Loans Cost?
Tax loans are often priced as a flat monthly rate on the amount borrowed. Compare the total cost with HMRC's own options, such as a Time to Pay arrangement, before deciding.
- A flat monthly rate or fixed interest
- Short terms keep the total cost down
- Some lenders charge an arrangement fee
- Compare with HMRC late payment interest and penalties
Worked example
A £60,000 VAT bill over 6 months
- VAT bill
- £60,000
- Flat rate
- 1.25% a month
- Total cost
- £4,500
- Monthly repayment
- £10,750
- Total repayable
- £64,500
Illustrative only, not a quote. Flat rates aren't APRs, so compare total costs.
Who Can Get VAT and Tax Loans?
- A UK business with a VAT, corporation tax or PAYE bill
- Usually at least 12 months' trading
- Filed returns and an up-to-date tax position
- Affordability for the repayments alongside the next tax bill
- A credit profile the lender can accept
What You'll Need to Apply
- The VAT return or tax calculation
- Recent business bank statements
- Latest accounts
- Director ID
Pros and Cons of VAT and Tax Loans
Advantages
- Avoid HMRC penalties and interest
- Keep cash for running the business
- Fast, simple applications
- Repayments can match your VAT cycle
Things to watch
- Adds a cost to a bill you already owe
- Can mask an ongoing cash flow problem
- Short terms mean high monthly payments
- HMRC Time to Pay may be cheaper
What It Can Pay For
VAT bills
Quarterly or annual VAT payments.
Corporation tax
Spread the cost of a large annual payment.
PAYE and other HMRC bills
Some lenders fund payroll taxes and self-assessment for partners and sole traders.
HMRC Time to Pay
An agreement with HMRC to pay in instalments. Often cheaper if HMRC agrees.
VAT and Tax Loans vs Other Options
| Option | Best for | Typical speed | Security |
|---|---|---|---|
| VAT and tax loan | Paying HMRC on time | 1 – 5 days | Usually none |
| Business line of credit | Regular tax and cash flow peaks | 1 – 5 days | Usually none |
| Unsecured business loan | Larger or longer needs | 1 – 5 days | None (guarantee usual) |
| Invoice finance | Cash tied up in invoices | 1 – 3 weeks to set up | Your invoices |
Who Uses VAT and Tax Loans?
Tax loans are used by businesses whose income is uneven across the year.
Customer story
“[Real customer story for VAT and Tax Loans: what they needed, how quickly it was arranged and what it let them do.]”
[Name], [Role], [Business name] · [Amount] VAT and tax loan
VAT and Tax Loans FAQs
Can a loan pay HMRC directly?
Yes. Many tax loan lenders pay HMRC on your behalf so the bill is settled before the deadline.
Is HMRC Time to Pay better?
It can be cheaper, but HMRC must agree and you'll still pay interest. A tax loan gives certainty and keeps your HMRC record clear.
How quickly can I get a VAT loan?
Often within a few days, so apply at least a week before your deadline.
What if I've already missed the deadline?
Some lenders will still help, but late payment penalties and interest may already apply. Contact HMRC too.
Is a tax loan a good idea every quarter?
Occasional use is fine. If you borrow for every bill, it's worth reviewing your cash flow or using a revolving facility.
Related Guides
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