Tax loans: how to finance your corporate tax bill

Running your own business requires juggling a range of expenses – utilities, payroll, stock, debt etc. – many of which change on a regular basis depending on demand, market conditions and economic factors. That means finding spare capital when paying your tax bill can be a challenge. Which is why many businesses turn to tax loans to help them cover the immediate burden and avoid costly penalties.

Tax loans allow businesses to spread the cost of their tax liabilities into manageable monthly payments, helping preserve short term working capital and avoid the financial burden of making one large payment.

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What is a tax loan?

A tax loan is a short-term business loan designed specifically to help companies pay their tax bills. Instead of depleting your cash reserves with a single payment, a tax loan allows you to make smaller, more manageable payments over time, typically up to 12 months or even longer depending on the lender​​.

This solution is ideal for businesses that need to:

• Cover corporation tax or VAT bills without tapping into working capital.
• Manage income tax or capital gains tax payments in a way that doesn’t disrupt day-to-day operations​​.
• Maintain healthy cash flow while avoiding extra fees from HMRC.

Use cases for tax loans

Businesses of all types use tax loans to smooth out cash flow and avoid the pressure of making large tax payments. Here are a few examples of when a tax loan might be the best solution:

• Corporation tax: If your business has just received a large corporation tax bill, a tax loan can help spread the payment over 6 to 12 months, reducing the impact on your cash reserves​.
• VAT bills: VAT deadlines can often creep up on you, and if your business doesn’t have sufficient cash set aside, a VAT loan can help cover the payment while you continue to operate.
• Income tax: Sole traders and company directors often find themselves owing large sums of income tax. A tax loan provides the flexibility to cover this without needing to draw from personal or business savings​.
• Unexpected tax assessments: If HMRC issues an unexpected or higher-than-anticipated tax bill, a tax loan can provide quick relief, helping you pay the bill on time without incurring extra costs..

How do tax loans work?

Tax loans work much like other finance options, and can come in the form of unsecured loans or secured loans, depending on your circumstances.

1. Application and approval: Applying for a tax loan is usually fast and simple, with many lenders offering online applications. Approval times vary, but some lenders can make decisions within 24 hours, ensuring you receive funds quickly​.
2. Receive funds: Once approved, the loan is either deposited into your business account or paid directly to HMRC, depending on the lender​.
3. Fixed repayments: Tax loans typically come with fixed monthly payments, which can make it easier to budget for the expense and avoid surprises down the line​​.
4. Flexibility: Some lenders, including iwoca, offer the flexibility to repay the loan early without penalties, giving you more control over your finances​ if you want to avoid extra interest.

How iwoca can help with tax loans

At iwoca, we’ve helped over 120,000+ businesses keep their operations running smoothly and invest in their future. You can get a short-term loan from £1,000 to £1,000,000 with no collateral required, to use for any purpose your business needs, including VAT, corporation tax, or other liabilities.

• Quick access to funds: Get a decision on your application within 24 hours and receive funds as soon as the next business day.
• Flexible repayment terms: Borrow from just a few days to 60 months, with the option to repay early with no penalties.
• No unnecessary paperwork: We focus on your business’s overall performance, making the application process as smooth as possible.
• Keep your business moving: With a tax loan from iwoca, you can cover your tax bill while maintaining the working capital needed to grow your business.

Whether you’re dealing with VAT, corporation tax, or an unexpectedly high tax bill, iwoca’s flexible, fast financing solutions make it easier to keep your business moving forward without the stress. Find out how much you could borrow with our small business lending calculator.