Check your options
How big is the bill?
About 90 seconds in all. No credit check until you choose a lender. Capito is a broker, not a lender.
Key facts
- HMRC charges late payment interest at the Bank of England base rate plus 4%.
- Late VAT also attracts penalties: 3% of what's unpaid at day 15, another 3% at day 30, then a daily penalty at 10% a year.
- Corporation tax is due 9 months and 1 day after your accounting period ends; companies with profits over £1.5m pay in instalments.
- Capito is a UK Commercial Finance Broker, not a lender. Business loans start from over £25,000.
What are your three options?
HMRC Time to Pay
An agreement to pay HMRC in instalments. HMRC charges late payment interest on the balance, but agreeing a plan before the deadline can stop late payment penalties building up. HMRC checks what you can afford and expects you to use savings or other assets first, so it doesn't agree every request. gov.uk
A short business loan
A loan, often unsecured, that pays the bill in full and on time, repaid monthly. Terms are usually matched to the next few quarters, often 3–12 months. Lenders generally treat a loan for a tax bill like any other working capital need. Capito arranges business loans over £25,000, unsecured up to £1m, with decisions in as little as 2 hours.
Invoice finance
An advance against invoices you've already issued. It suits businesses whose customers owe money and pay slowly; the cash comes from your sales ledger, not a new loan. See business loan vs invoice finance.
How do the options compare?
HMRC Time to Pay
Business loan
Invoice finance
What it is
Instalments agreed with HMRC
A loan repaid monthly
An advance against unpaid invoices
Cost
HMRC interest on the balance
Lender's interest and fees
Fees on the invoices funded
Who decides
HMRC
The lender
The lender, based on your customers
HMRC paid on time?
No, paid over the plan
Yes
Yes, if the advance covers it
Fits when
Cash is short for a while and HMRC agrees
You want HMRC paid in full now
Customers owe you money
What does paying late cost?
More than most people expect, and it's the one option to avoid. Take a £100,000 VAT bill paid 60 days late with no arrangement (illustration only, using gov.uk's penalty rules):
First penalty, 3% at day 15
£3,000
Further 3% at day 30
£3,000
Second penalty, 10% a year from day 31 (30 days)
about £820
Late payment interest, base rate + 4%, for 60 days
on top
Total penalties before interest
about £6,820
With a Time to Pay plan agreed in time, you'd pay interest but avoid most of the penalties. Source: gov.uk
When does a loan make more sense than Time to Pay?
Time to Pay is usually cheaper on interest, so a loan is the right call only in particular cases:
- HMRC has refused, or offered a plan too short for your cash flow.
- HMRC wants you to empty your savings first, and you'd rather keep a buffer for wages and suppliers.
- The bill sits alongside other cash needs, such as stock or a seasonal dip.
- You want certainty before the deadline instead of waiting on HMRC's decision.
- You'd rather keep a clean payment record with HMRC.
If none of these apply, ask HMRC first.
What do lenders look at?
Usually your trading history, turnover, recent bank statements, filed accounts and returns. Expect the lender to ask about any existing HMRC arrears, and directors may be asked for a personal guarantee. The loan must be over £25,000 for us to arrange it.
Can you fund PAYE or other HMRC bills the same way?
Yes. The same three options apply to PAYE and other HMRC liabilities, and lenders look at them in the same way.
Common questions
When are VAT and corporation tax due?
For most businesses, VAT is due one month and seven days after the end of the VAT period. Corporation tax is due nine months and one day after the end of the accounting period; companies with profits over £1.5m pay in instalments. gov.uk
What does paying VAT late cost?
Interest at base rate plus 4%, and a penalty of 3% of what's unpaid at day 15, another 3% at day 30, then a daily penalty at 10% a year.
Will HMRC always agree Time to Pay?
No. It depends on the amount, your history and whether HMRC thinks you can keep up the payments. Ask before the deadline, not after.
Can I get a business loan if I already owe HMRC?
Sometimes. Lenders will want to know the amount and whether a plan is in place, and some won't lend while arrears are outstanding.
Can my accountant introduce me?
Yes. Accountants often spot a large bill coming months ahead, which is the best time to arrange funding.
Tax bill coming up? Tell us the amount and when it's due, and a specialist will come back with options. Loans over £25,000.
Get funding optionsCapito is a Commercial Finance Broker, not a lender. Capito Finance Limited is not authorised or regulated by the Financial Conduct Authority. Finance is subject to the lender's assessment. This is general information, not tax advice; speak to your accountant about your position.