VAT and tax bill loans
Compare VAT &
Tax Bill Loans
Pay HMRC on Time
What we do
Compare Advantage is a free comparison service. Tell us the size of the tax bill and when it is due, and our partner, FCA-authorised broker Halo Corporate Finance, checks your enquiry against the 130+ lenders on its panel. You can weigh what comes back against an HMRC payment plan before you decide.
- VAT, corporation tax, PAYE and self assessment bills
- Pay HMRC in full and on time, then repay monthly
- One enquiry checked against 130+ lenders
Prefer to talk? Call 0330 057 7175
- 130+ lendersOn our partner’s panel
- £5k to £1mLoans and asset finance
- One enquiryInstead of one per lender
- FCA-authorised partnerHalo Corporate Finance
- Free to enquireNo obligation to apply
Compare before you apply
Compare a tax loan with paying HMRC late
A tax bill is one of the few debts with a fixed date and a known cost of missing it. That makes the comparison unusually clear: the cost of a loan against the interest and penalties HMRC would charge, and against an HMRC payment plan. For some businesses Time to Pay is the cheaper answer. For others, a short loan keeps HMRC paid, keeps the tax record clean and gives a fixed schedule. Checking the panel shows you the loan side of the comparison.
- 1
Tell us once
Two minutes on the form: how much, what it is for and a few details about the business.
- 2
The panel is checked
Halo Corporate Finance matches your enquiry against the 130+ lenders on its panel.
- 3
You choose
Halo talks you through the options that fit. You decide whether to apply. There is no obligation.
What to compare
- A tax loan against HMRC Time to Pay. A payment plan with HMRC may be cheaper. A loan keeps HMRC paid and your record clean. The table below shows the trade-off.
- The total cost of the loan against the interest and penalties you would pay HMRC by paying late. That comparison decides whether a loan makes sense.
- The term against your next bill. Spreading this quarter’s VAT over twelve months means two bills overlap. Many businesses repay within the next quarter or two.
- How the money is paid. Some tax loans are paid straight to HMRC; others into your account. Either way, make sure it lands before the deadline.
- Whether you can repeat it. If the bill comes every quarter, some lenders offer a facility you can use again, which may suit better than a one-off loan.
The short answer
How does a VAT or tax loan work?
A lender pays your tax bill, either to you or straight to HMRC, before the deadline. You then repay the lender in fixed instalments over a short term, typically three to twelve months, sometimes longer for larger bills.
It is an ordinary business loan with one purpose, which helps: the amount and the date are known, and lenders who specialise in tax funding understand the pattern of quarterly VAT and annual corporation tax.
Most are unsecured, with a personal guarantee from the directors of a limited company.
Know your dates
When the main business taxes are due
Finance takes days to arrange, not hours. Put these dates in the diary and start a few weeks before.
VAT
1 month and 7 days after the end of each VAT period
For most businesses that file quarterly. Payment must have cleared into HMRC’s account by the deadline.
Corporation tax
9 months and 1 day after the end of the accounting period
For most limited companies. Companies with taxable profits over £1.5 million pay in quarterly instalments instead.
Self assessment
31 January after the end of the tax year
The balancing payment for the last tax year, plus the first payment on account for the current one. A second payment on account is due on 31 July.
PAYE and National Insurance
The 22nd of the following month if paid electronically
Monthly for most employers, or quarterly for small employers who pay less than a set amount.
The cost of waiting
What paying VAT late costs
Since 2023, VAT has used a penalty system that rewards dealing with a bill early, and HMRC raised the penalty rates in 2025. Interest starts the day after the deadline, at the Bank of England base rate plus 4%. Penalties start if the bill is still unpaid after 15 days, and grow if it is still unpaid after 30.
You can stop penalties building by paying in full or agreeing a payment plan with HMRC. Interest still runs on anything left unpaid. HMRC sets out the current rates on GOV.UK.
- 1
Day 1 to 15
Late payment interest is charged from the day after the deadline. No penalty if you pay or agree a plan in this window.
- 2
Day 16 to 30
A first late payment penalty of 3% of the VAT still owed at day 15, unless it has been paid or a plan agreed.
- 3
Day 31 onwards
A further 3% of whatever is still owed at day 30, plus a second penalty that builds at 10% a year on the balance until it is paid.
Two ways to spread a tax bill
HMRC Time to Pay vs a tax loan
Neither is right for every business. This is how they compare on the things that matter.
| Feature | HMRC Time to Pay | Tax loan |
|---|---|---|
| Who you deal with | HMRC | A lender, introduced through Halo |
| HMRC’s view of the bill | Owed, but covered by an agreed plan | Paid in full and on time |
| Cost | HMRC interest, at base rate plus 4%, on what is still owed | The lender’s interest and any fees |
| Late payment penalties | Generally not charged while the plan is kept to, if agreed in time | None, because HMRC is paid on time |
| Getting it | Online for VAT or PAYE debts up to £100,000, or self assessment up to £30,000, if you meet HMRC’s conditions. Otherwise by phone | An enquiry, then a lender’s application and checks |
| If you miss a payment | HMRC can cancel the plan and ask for the full amount | The lender’s arrears process and any guarantee |
| Effect on future borrowing | Lenders see a tax arrangement in your bank statements | A loan repaid on schedule, like any other |
Time to Pay is set up with HMRC directly, not through us. See GOV.UK for HMRC’s current conditions.
Why use a loan
Why some businesses fund the bill instead
Keep a clean tax record
Paying on time avoids penalty points and late payment penalties, and keeps HMRC from looking more closely at future returns.
Protect working capital
Paying a large bill in one go can leave too little for wages and suppliers. A loan spreads it while trading carries on as normal.
Know exactly what you pay
A fixed repayment schedule, instead of interest that keeps adding up on a balance owed to HMRC.
Keep future lenders onside
Some lenders look less favourably on a business with an HMRC arrangement. A loan repaid on schedule reads like ordinary borrowing.
Next quarter
Stop the next tax bill becoming a problem
A loan solves this bill. These habits make the next one easier, and make lenders more willing if you do need help again.
Compare tax loans- Move the VAT element of every sale into a separate savings account as it comes in
- Ask your accountant for a corporation tax estimate a few months before the year end
- Check whether the VAT Cash Accounting Scheme would suit your business
- Consider paying VAT in instalments through HMRC’s Annual Accounting Scheme
- Keep your HMRC online account up to date so reminders reach you
Questions
VAT and tax loan questions
See all business finance for other ways to fund the business.
Compare tax loansWhat is a VAT loan?
A short-term business loan used to pay a VAT bill in full and on time. You then repay the lender in monthly instalments, often over three to twelve months. The same type of loan can pay corporation tax, PAYE or self assessment.
When is VAT due?
For most VAT-registered businesses, the return and payment are due one calendar month and seven days after the end of the VAT period. The payment must have cleared into HMRC’s account by that date.
What happens if I pay VAT late?
HMRC charges late payment interest at the Bank of England base rate plus 4% from the day after the deadline. If the VAT is still unpaid after 15 days there is a 3% penalty, a further 3% after 30 days, and then a second penalty of 10% a year on the balance. Paying in full or agreeing a payment plan stops the penalties building.
What is HMRC Time to Pay?
An arrangement with HMRC to pay a tax bill in instalments. You can usually set one up online for VAT or employers’ PAYE debts of up to £100,000, or self assessment debts of up to £30,000, if you meet HMRC’s conditions. Otherwise you call HMRC. Interest is charged at base rate plus 4% on the amount still owed.
Is a VAT loan better than HMRC Time to Pay?
Not always. Time to Pay can cost less. A loan keeps HMRC paid on time and keeps the arrangement off your tax record, and suits businesses that do not meet HMRC’s conditions or want a fixed schedule. Compare the cost of both.
Can I get a loan to pay corporation tax?
Yes. Corporation tax loans work the same way as VAT loans: the lender funds the bill, and you repay over an agreed term, usually up to a year. Corporation tax is normally due nine months and one day after the end of your accounting period.
Can a sole trader get a loan to pay a self assessment bill?
Yes. Lenders on the panel consider self assessment bills for sole traders and partners. Borrowing of £25,000 or less by a sole trader can be regulated under the Consumer Credit Act, and Halo handles those enquiries directly.
How quickly can a tax loan be arranged?
Some lenders can decide within days once they have your bank statements and the tax bill. Start a few weeks before the deadline if you can. Leaving it to the last day narrows the choice of lenders.
Can I get a VAT loan if I already owe HMRC?
It is harder, but some lenders will consider it, especially if the business is trading well and the debt is recent. Tell Halo about any existing HMRC arrears or plans in your enquiry.
Can I claim the interest as a business expense?
Interest on a loan taken out for business purposes, including paying business taxes, is usually an allowable business expense. Check the treatment for your business with your accountant.
Sources
- GOV.UK: If you cannot pay your tax bill on time (Time to Pay)
- GOV.UK: Pay your VAT bill
- GOV.UK: VAT penalties and interest for late payment
- GOV.UK: Increase to VAT late payment penalty rates (2025)
- GOV.UK: HMRC interest rates for late and early payments
- GOV.UK: Pay a tax bill in instalments
- GOV.UK: Corporation Tax, paying in instalments
- GOV.UK: Pay your Corporation Tax bill
- GOV.UK: Self Assessment tax return deadlines
- GOV.UK: Pay employers’ PAYE
Written by the Compare Advantage team, Chorley. Facts checked against the sources above on 4 November 2026. This page is general information, not financial advice.
Compare Advantage Ltd (FRN 1028452, company no. 14289362) is an Introducer Appointed Representative of Halo Corporate Finance Ltd (FRN 726655). We introduce business finance enquiries to Halo. We are not a lender and do not give financial advice. If you take out finance, the lender may pay commission to Halo Corporate Finance, and Halo may pay us a fee for the introduction. Finance is subject to status and is available to UK businesses only.