£237,946 across four facilities. Corporation tax spread, not taken in one hit.
An accountancy practice that spreads its corporation tax rather than taking a single large cash hit.
Corporation tax fundingRead the transaction
Tax funding
Corporation tax loans: spread your company's tax bill over monthly payments
Spread a large corporation tax bill into fixed monthly repayments. How the loans work, why profitable firms still run short of cash, and what lenders check.
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In short
Yes, you can borrow to pay corporation tax.
A lender settles the bill, or funds you to settle it, and the company repays in fixed monthly instalments over a short term. Lenders mainly want a UK limited company with filed accounts, a clear tax computation and bank statements showing the repayments are affordable. Most loans are unsecured but need a director's personal guarantee.
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About corporation tax loans
A corporation tax loan is a short-term business loan used to pay your company's corporation tax bill to HMRC in full and on time.
A corporation tax loan is a short-term business loan used to pay your company's corporation tax bill to HMRC in full and on time, then repaid to the lender in fixed monthly instalments. It is for UK limited companies that made a healthy profit but no longer have that profit sitting in the bank, because it has gone into stock, equipment, staff or debtors. Smart Funding Solutions approaches lenders that fund corporation tax, including specialist tax funders, and compares the terms for you.
Corporation tax loans sit within our wider HMRC loans range, alongside VAT and self-assessment funding.
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A transaction we arranged
£3,371,432
£3.37m across seven facilities. Profitable on paper, and liquid when it mattered.
Payroll goes out every week, clients pay on terms and the tax bill lands in between. We funded the gap, seven times.
Read the transaction- Sector
- Recruitment business
- Structure
- Tax funding
- Outcome
- Repeat funding relationship
How a corporation tax loan works
- You share the billlenders want to see your corporation tax computation or HMRC liability.
- The lender assesses affordabilityit reviews your accounts, bank statements and credit history.
- The offer is signedif the lender approves, it issues a loan agreement and any director guarantee for signature.
- The tax is paiddepending on the lender, funds go to HMRC directly or to your business account to pay the bill.
- You repay monthlyfixed repayments over a short term agreed with the lender.
Some lenders will also refinance a corporation tax bill you have recently paid from your own cash, which can restore working capital. Lenders set time limits on this, so raise it early.
Why profitable companies run short when corporation tax is due
Corporation tax is charged on profit, not on cash. A company can show a strong profit for the year yet have spent the money growing: buying stock ahead of demand, investing in equipment, or waiting on customers who pay slowly. The bill then arrives months after the year end, often as a single payment, when cash is committed elsewhere. Spreading it protects the growth that created the profit.
When corporation tax is due
For most companies, corporation tax is payable nine months and one day after the end of the accounting period; larger companies pay in quarterly instalments. Late payment attracts interest from HMRC. Check GOV.UK: pay your Corporation Tax bill for the current rules that apply to your company.
When a corporation tax loan may suit
- A large annual bill would drain reserves needed for payroll, stock or suppliers.
- You want to keep investing in growth rather than pause it to pay tax.
- Your year end falls so the payment lands in a quiet trading period.
- You paid the bill from cash and now need to rebuild working capital.
Security and personal guarantees
Most corporation tax loans are unsecured, so you do not pledge property or equipment. Lenders usually ask one or more directors for a personal guarantee instead. Directors who want to limit that exposure can look at personal guarantee insurance from specialist insurers; we do not give insurance advice.
Costs and planning
You pay interest and possibly an arrangement fee, so borrowing costs money that paying from reserves would not. Pricing depends on your credit profile, trading history, the amount and the term. Plan the term carefully: if next year's bill arrives while this loan is still being repaid, the commitments stack up. Setting aside a monthly tax reserve once the loan is cleared helps break the cycle.
Alternatives to a corporation tax loan
HMRC Time to Pay
If you cannot pay, HMRC may agree a Time to Pay arrangement to spread the debt. It is at HMRC's discretion, usually requires contacting HMRC before the deadline, and interest still accrues. See GOV.UK: if you cannot pay your tax bill on time.
Other finance
A revolving credit facility or overdraft can cover tax alongside other recurring costs; invoice finance can release cash tied up in unpaid invoices; and a VAT loan handles the quarterly VAT bill if that is the one causing pressure.
How to apply
Send us your tax computation, accounts, bank statements and director details, and we approach lenders that fund corporation tax, then talk you through the offers. Contact us well before the payment deadline: decisions can come within a few working days once a lender has everything it needs. Approval is always the lender's decision. When you have your tax figure, discuss your requirement online.
Underwriting
What lenders look at
01
A UK-registered limited company with a trading history and filed accounts.
02
Profitability and the trend in turnover, since the tax reflects last year's profit.
03
Evidence of the liability and the due date; underwriters often compare the tax figure with the profit in your accounts to check the two tie up.
04
Bank statements showing the repayments are affordable alongside VAT and payroll.
05
Company and director credit history, and any existing HMRC arrears.
Checklist
Documents to have ready
- The corporation tax computation (CT600) or HMRC statement.
- Latest filed accounts and, if the year end was some months ago, current management accounts.
- Recent business bank statements.
- Director identification and address details.
- Proof of payment to HMRC, if you are refinancing a bill already paid.
Side by side
Compare your options
How the main business finance structures work. Lenders set their own terms, so treat this as a guide to the questions to ask.
| Option | How you repay | Security | Often used for |
|---|---|---|---|
| Unsecured business loan | Fixed instalments, usually monthly | No charge over assets; a personal guarantee is usually required | Growth, stock, tax bills and cash flow |
| Secured business loan | Fixed instalments, often over a longer term | A charge over property or other assets | Larger sums, property and refinancing |
| Revolving credit facility | Interest on what you draw; repay and redraw | Varies by lender and case | Recurring or uneven cash flow gaps |
| Merchant cash advance | A share of future card takings | No charge over assets | Card-taking businesses with uneven months |
| Asset finance | Regular payments over the life of the asset | The asset being financed | Equipment, vehicles and machinery |
| Invoice finance | Settled as customers pay their invoices | Your unpaid invoices | Businesses waiting on customer payment |
General information only. Every lender has its own criteria, and all finance is subject to status.
FAQs
Questions clients ask
Can I get a corporation tax loan with bad credit?
Some lenders will consider a corporation tax loan where the company or its directors have adverse credit, but the choice is narrower and pricing is usually higher. Lenders check company and director credit history and any existing HMRC arrears, and they look closely at whether bank statements show the repayments are affordable. Older, settled problems are viewed more favourably than recent ones. See bad credit business loans for how lenders assess credit issues.
Is a corporation tax loan better than HMRC Time to Pay?
Neither is always better: a corporation tax loan pays HMRC in full and on time, while Time to Pay spreads the debt with HMRC itself. Time to Pay is at HMRC's discretion and interest still accrues, whereas a loan costs interest and possibly an arrangement fee but keeps your HMRC account clear. Our comparison of Time to Pay vs a tax loan sets out when each tends to suit.
How long can I spread a corporation tax loan over?
Corporation tax loans are short-term loans repaid in fixed monthly instalments, with the exact term agreed with the lender. The term should ideally end before the next corporation tax bill is due, which for most companies is nine months and one day after the year end. Otherwise the two commitments stack up. Setting aside a monthly tax reserve once the loan is cleared helps avoid borrowing again next year.
Can a sole trader get a corporation tax loan?
No, corporation tax loans are for UK limited companies, because sole traders do not pay corporation tax. A sole trader pays Income Tax through Self Assessment instead, and that bill can be funded with a different product that works in a similar way, with fixed monthly repayments over a short term. Borrowing of £25,000 or less by a sole trader can be regulated consumer credit. See income tax loans for the details.
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