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VAT Loans
What are VAT Loans?
If you’re a UK business owner, you’ll be familiar with the challenge of managing your VAT payments. These payments are due quarterly and can put a strain on your cash flow, particularly if you’re a smaller business. One option available to businesses to help ease this burden is a 3-month VAT loan. In this blog post, we’ll explore the key features of a 3-month VAT loan and how it can benefit your business.
Short-term finance: A 3-month VAT loan is a type of short-term finance that allows businesses to borrow money to cover their VAT payments for three months. This means that the loan is repaid over the same period as the VAT payment cycle, making it easier for businesses to manage their cash flow.
Flexible loan amounts: VAT loans are typically available for amounts up to the value of your VAT payment. This means that you can borrow the exact amount you need to cover your VAT payment, rather than having to borrow more than you need.
Quick and easy application process: The application process for a VAT loan is usually quick and straightforward, with many lenders offering an online application process. This means that you can apply for a VAT loan and receive a decision quickly, allowing you to access the funds you need to cover your VAT payment.
Fixed interest rates: VAT loans typically have fixed interest rates, which means that the interest rate you pay is fixed for the duration of the loan. This can make it easier to budget and plan for your repayments, as you know exactly how much you’ll be paying each month.
No early repayment penalties: Many VAT loans allow you to repay the loan early without incurring any penalties. This means that if you’re able to pay back the loan sooner than the agreed term, you can do so without any additional costs.
Avoid penalties for late payment: By taking out a VAT loan, you can ensure that you have the funds to make your VAT payment on time, avoiding any penalties for late payment from HM Revenue & Customs (HMRC).
In conclusion, a 3-month VAT loan can be a flexible and cost-effective way for UK businesses to manage their cash flow and avoid penalties for late payment. With a quick and easy application process, fixed interest rates, and the ability to repay the loan early without incurring penalties, a VAT loan can help businesses to budget and plan for their VAT payments with confidence
Benefits of VAT Loans
VAT Loans offers many benefits to UK businesses, including:
Cashflow Benefits
Without sufficient cash reserves, every business will eventually fail. VAT Loans provide an extra stream of funding that can be used in addition to bank overdraft or invoice finance facilities, without impacting on these existing facilities. This added stream can even out cashflow peaks and troughs. Not only that but the extra working capital available can be used to reduce costs elsewhere, and is available for other business growth or investment needs.
Cost Saving Benefits
Some businesses have found themselves in the painful position of incurring VAT late payment penalties (surcharges) from HMRC even when filing their payments a day or so late. Repeated late payments see an escalating penalty being applied and it can reach as high as 15% added to the VAT liability. When a business is in this position it can be very hard to break the cycle. By ensuring VAT is paid on time, every time, businesses already subject to surcharge can see an immediate reduction in costs, and other businesses can rest assured that they won’t find themselves running the risk of being in this position.
HMRC Relationship Benefits
Having a great relationship with HMRC is very helpful if and when Corporation Tax and other tax inspections are undertaken. By ensuring that Corporation Tax is paid on time HMRC can build a picture of a properly managed and well run company that settles its affairs in a timely manner.
Peace of Mind Benefits
With so many things pulling at the focus of a business owner there is alot to be said for having order and structure in place in as many business areas as possible. By ensuring that a Corporation Tax loan facility is always in place a business owner has one less thing to worry about and can be confident that their Corporation Tax will be paid on time, costs are more evenly spread and cashflow is being maximised.
Security Benefits
Most forms of lending require some form of security offered by the borrower to the lender. Overdrafts, for example, will typically require the business to offer a debenture over all business assets to their bank. Sometimes this can extend to charges over directors’ homes. Security in Corporation Tax Loans, on the other hand, is often offered entirely unsecured and where security is required it is only in the form of an unsupported directors personal guarantee, meaning no charges against any property are sought or requested. Most business owners, confident in their business trading for the next year, have no concern about offering guarantees in these short term circumstances.
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How VAT Loans Works
We make your VAT loan journey as simple as possible.
As your trusted business finance partner, we work closely with you every step of the way to ensure a seamless process:
01
Consultation and Options
From your first call, email or completed webform we will act as your trusted partner, understanding your objectives and putting together options for you to consider.
02
Information Gathering
We may need to ask you some general business questions and ask for some financial information from you in order to carefully prepare your personalised quotation from our funding panel.
03
Funding Application
Once you have reviewed your no obligation quotations and are happy to proceed we will prepare your application and liaise with the lenders to secure the funding you need.
04
Agreement Finalization
Unlike some brokerages, we do not charge you any payments or fees for our brokerage service, so your engagement with us is entirely cost, risk and obligation free.
05
Deal Activation
From here we ensure everything is finally packaged and presented to the finance company who will activate your agreement and pay HMRC directly, or, subject to approval, to you, allowing you to enjoy the peace of mind that you wont incur any late payment surcharges and have the added benefit of the additional working capital.
Why choose MacManus Finance for VAT Loans?
UK firms are well advised to engage the service of a skilled independent brokerage who can save them time and money by accessing the widest panel of options, who are Authorised and Regulated by the Financial Conduct Authority and are full members of the National Association of Commercial Finance Brokers trade association, as membership of both requires firms to demonstrate the highest standards of integrity and submit to consistent monitoring of activities, providing the business owner with confidence in the firm they have chosen to work with.
MacManus Asset Finance are one such firm – directly authorised by the Financial Conduct Authority, full members of the National Association of Commercial Finance Brokers, and with a customer base of almost 300 UK businesses whom we have supported for over 15 years.
This credibility combined with an extensive panel of asset finance providers, including some of the best priced, and most flexible lenders in the marketplace provides a winning combination.
Our business motto is “Never Just a Number” – and we take pride that our clients never feel like they are just a number to us, as so many business owners are made to feel by larger financial institutions.
Your business success is our business success, we never take our clients for granted, and will always aim to deliver more than our clients expect.
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Types of VAT Loan
Discover the two main options for VAT loans tailored for businesses in the UK, offering flexible financing solutions to manage VAT obligations effectively and optimize cash flow.
Full VAT Loan
A three to twelve month Corporation Tax loan is sought to cover the exact, to the penny, Corporation Tax liability of a business.
A copy of the completed Corporation Tax return is provided to the funder and once agreed the finance documents are prepared for the precise amount.
Funds can be paid to HMRC directly, or to the business, for onward payment to HMRC, subject to lender approval.
Or the business can pay HMRC directly in full in the first instance and then have the Corporation Tax payment refinanced a day or so later, subject to proof of payment from the business to HMRC being received by the funder.
The business then repays the loan plus interest in three to twelve monthly installments to fit in with the business’ budgeting needs.
Partial VAT Loan
Sometimes businesses may only want to fund a part of their Corporation Tax liability and don’t require funding for the full amount – the partial Corporation Tax Loan is perfect for this situation.
The underwriting process is exactly the same as for the full Corporation Tax Loan however a specific amount is requested, rather than the full Corporation Tax liability.
As only some of the Corporation Tax will be funded by the finance company, the business customer must ensure that the balance is paid to HMRC by the deadline to avoid incurring any surcharges.
This option still provides the bulk of cashflow benefit to the business customer and ensures no surcharges are incurred, whilst reducing the overall interest cost.
Frequently Asked Questions
Self Assessment Tax Loan are available for periods ranging from 3 to 12 months allowing the business owner the flexibility to choose a term that suits their budgeting needs.
We will always deliver the best rate of finance possible based on your specific circumstances.
Our extensive funding panel means we can help businesses in every situation, as such every client will receive bespoke pricing based on their credit worthiness, market conditions and industry appetite that varies from time to time.
Our rates, for the best clients, are market leading and you should have no hesitation in contacting us if price is your motivator.
We are super quick. We will provide you with indicative terms within 5 minutes of a conversation.
When you ask us to proceed to application, we will request some financial and business information from you to support the application.
Once received your application will be sent to the finance providers within 60 minutes.
Funders have varying service times from 1 hour to 5 days, but most are around 3 days for a decision.
Once agreed we let you know and can ensure we pay HMRC in good time.
Yes, yes, yes.
Most of our clients use the facility every year and it becomes an additional cashflow tool that they can rely on.
We keep in close contact with you to ensure we approach the funders at the right time to request approval of each years Self Assessment Tax loan.
Provided a good payment history is maintained it is usually straight forward to get the new facility agreed.
We have active lines with dozens of providers, including most high street bank and most of the major asset finance providers plus a number of niche players.
We haven’t been asked to fund an asset that we weren’t able to place somewhere.
Nothing. Zero. Not a penny!
For asset finance business we do not charge our clients any fees at all. We are paid commission by the finance providers for successfully placing business with them, and we only get paid if we deliver a finance solution that you are happy with.
As a result we ask all clients to engage with us on the basis of good faith, in that, if we are asked to secure funding and do indeed deliver what we promised, that our clients complete the transaction with us.
Our minimum Corporation Tax loan amount is £10,000 however we have no maximum limit.
Each application is considered on its own merits.