From around £10,000 to £500,000+Larger facilities available in suitable cases
Security
Secured or unsecuredOptions compared for your case
Suitable businesses
Sole traders to limited companiesPartnerships and LLPs too
Lender panel
300+ lendersWhole-of-market search
In short
Accountancy practices borrow to pay three kinds of tax: partners' or members' self-assessment bills in January and July, the firm's VAT quarters, and corporation tax where the practice is incorporated. A short-term tax loan pays HMRC on time and is repaid monthly, ideally before the next bill falls due. Lenders want the HMRC liability, recent bank statements and management figures, and they ask why a firm that advises on tax did not reserve for its own.
Accountants spend January making sure clients pay HMRC on time, and the practice's own liabilities often land in the same weeks. This page is for partners, LLP members and directors of accountancy firms whose tax bill arrives when the cash is still in WIP or debtors. Smart Funding Solutions is a broker, not a lender: we approach specialist tax funders and other lenders on our panel, for amounts from around £10,000 to £500,000+, with larger facilities available in suitable cases. The wider range of practice finance is on our accountancy practice loans page.
Quick enquiry
Prefer a quick call back?
Not ready for the full application? Leave a few details and a broker will call you to talk it through. It is free, with no obligation.
The mismatch is structural rather than careless. Fees for the busy season are earned between October and January, but a large part is billed in February and collected in March and April. The firm's liabilities do not wait:
31 January: each partner's balancing payment for the previous tax year plus the first payment on account for the current one, falling while the firm's own debtors are at their peak.
The VAT quarter that includes February or March: accountancy fees are standard-rated, so the post-deadline billing surge produces the year's largest VAT return, often due before those fees are collected.
Corporation tax: for incorporated practices, due nine months and one day after the year end, which for many firms lands in the autumn build-up of WIP.
Partner changes: a retiring partner may leave with tax reserves that the continuing partners expected to use, while an incoming partner has no reserve at all for their first year's share.
Basis period reform and partners' tax bills
Many accountancy partnerships and LLPs historically used year ends such as 30 April, which pushed each partner's tax well behind the profits it related to. Income Tax basis period reform moved everyone to a tax-year basis from 2024 to 2025, with the extra "transition profit" from 2023 to 2024 spread by default over five tax years. For firms with non-March year ends, that means partners are paying tax on their normal share of profit plus a transition slice each year until 2027 to 2028, and payments on account are calculated on those enlarged figures. Firms whose accounting period no longer lines up with the tax year may also file on provisional profits and adjust later, which can produce an unexpected balancing payment a year on.
You will understand the mechanics better than any lender. The point for funding is that some practices face several years of higher partner tax bills without any matching increase in cash, and a planned facility each January is cheaper to arrange than a rushed one.
Illustration: a six-partner firm in January
Illustration only, with hypothetical round numbers. A six-partner LLP with a 30 April year end faces combined January payments of £240,000 for its members, including a transition profit slice, and a VAT quarter of £60,000 due shortly afterwards. The firm holds £100,000 in its tax reserve account and expects £400,000 of debtors to clear between February and April. A short-term loan of £200,000 taken by the LLP, paid against members' current accounts and repaid over the following months from collections, closes the gap without the members each approaching lenders. Whether that is better than an HMRC payment plan depends on the cost comparison below.
Costs, risks and the Time to Pay alternative
HMRC offers payment plans to businesses and individuals who cannot pay in full; its guidance on what to do if you cannot pay your tax bill on time explains the process. HMRC charges late payment interest on an arrangement, while a private lender adds interest and fees but settles HMRC in full. Some firms prefer a private loan so that the practice's own account with HMRC stays clear; others find Time to Pay the cheaper choice. Our comparison of Time to Pay against a tax loan sets out the trade-off.
Other points to weigh:
Interest on money borrowed to pay partners' personal tax is not treated the same way as trading borrowing; our note on whether business loan costs are deductible is a starting point, though you will want to apply the rules to your own firm.
Most tax loans need personal guarantees, so a partner who guarantees the firm's facility is exposed for colleagues' tax as well as their own.
If the firm funds tax every year, the lasting fix may be a larger reserve, lower drawings, or faster billing, which our page on fee and WIP funding covers.
Underwriting
What tax lenders check in an accountancy firm
Underwriters apply the usual affordability tests, then add questions that reflect the borrower's profession:
01
Why no reserve?
A credible answer, such as growth, a partner retirement, transition profits or a large WIP build, matters more than for most borrowers.
02
Is this a pattern?
Repeat tax borrowing is acceptable if it is planned and cleared each year; a balance that rolls into the next bill is not.
03
HMRC position
whether any liability is already overdue or subject to a payment plan.
04
Drawings against profit
whether partners are drawing more than the firm's cash generation supports.
05
Lock-up
how quickly the WIP and debtors behind the profit will turn into cash to repay the loan.
Checklist
Documents for a practice tax loan
The liability: each partner's tax calculation or HMRC statement, the VAT return, or the CT600 computation
The partnership or LLP members' agreement, including any tax reserve provisions
Partners' current and capital account balances
Filed accounts and current management accounts
Recent office account bank statements
Aged debtor and WIP reports showing the cash that will repay the loan
Details of existing borrowing and any HMRC arrangement already in place
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.
General information only. Every lender has its own criteria, and all finance is subject to status.
How accountancy firms fund tax
Liability
Who borrows
Structure that usually fits
Partners' or members' self-assessment
The firm, or each partner individually
Short-term loan to the firm, recovered through partners' current accounts; or a personal income tax loan
Firm's VAT quarter
The firm
VAT loan repaid before the next quarter, or a revolving facility redrawn each quarter
Corporation tax
The company
Corporation tax loan over a longer term than a VAT loan
Several liabilities in one season
The firm
A revolving credit facility sized to the peak, rather than separate loans
A firm-level loan for partners' tax
The common structure in larger partnerships and LLPs is for the firm to borrow, pay each partner's liability or release funds to them, and debit their current accounts, so the cost is borne by the partners in proportion. Lenders look at the firm's profit and the partnership agreement, and usually want guarantees from the partners. It keeps the arrangement in one facility and avoids each partner applying separately. Where a single partner's bill is the problem, a personal income tax loan may be simpler. Borrowing of £25,000 or less by sole traders and small partnerships can be regulated consumer credit, which brings additional protections.
VAT funding for the post-deadline quarter
A VAT loan pays the quarter in full and is repaid before the next return. Firms under the VAT cash accounting threshold should check first whether cash accounting would remove the problem, since VAT would then follow collection rather than billing. Late payment of VAT attracts penalties that escalate the longer it remains unpaid, as HMRC sets out in its guidance on how VAT late payment penalties work.
Corporation tax for incorporated practices
Limited company practices often extract profit as salary and dividends, so directors can face their own January bill in the same season as the company's liability. A corporation tax loan spreads the company's bill; the directors' personal position needs a separate conversation.
A revolving facility for the whole season
If VAT, partner tax and the professional indemnity renewal all cluster between January and April, a revolving credit facility can cover them in turn and be cleared as fees come in. Premium finance for the indemnity renewal is covered on our PII premium finance page.
Arranging the facility with us
Send us the liabilities, due dates and the firm's latest figures.
We check whether a firm-level facility, individual loans or a revolving line fits the pattern of bills.
We approach suitable tax funders on our panel and compare cost, term and guarantee requirements.
The lender makes its own decision and, depending on the lender, pays HMRC directly or releases funds to the firm.
It is free to enquire; any broker fee is disclosed separately before you proceed. Raise it in December rather than the last week of January.
What our clients say
I manage the VFO department at an accountancy practice and contacted Simon on behalf of a client whose unique situation made him appear unsuitable for finance. I had a chat with Simon and he got straight onto the case and found a fantastic finance deal which allows my client to take his business to the next level. Finance that appeared unattainable was sorted within a short period of time.
Accountancy practiceIntroduced a clientGoogle review
FAQs
Questions clients ask
Can a partner who is joining the firm fund their first tax bill?
Yes, and it is a common gap: a new partner's first January bill can include a payment on account with no reserve built up. Lenders will usually consider it alongside any capital contribution. Our page on partner buy-in finance for accountants covers the capital side.
Can the practice refinance tax it has already paid from its own cash?
Some lenders will fund a liability paid recently, restoring working capital, but they set time limits and want proof of payment. Raise it before paying if you can.
What happens to tax reserves when a partner retires?
It depends on the partnership agreement. If a retiring partner's reserve is released to them, the continuing partners may face the next bills with less cash than expected. Lenders will want to see how the payout is being funded; our page on partner buyout finance covers that side.
Does a tax loan show on the practice's credit file?
A loan to the firm is normally reported on the business credit file, and any personal guarantee or personal loan can appear on the partner's own file. Paying HMRC late can also lead to enforcement that affects credit, which is why lenders ask about the HMRC position first. See our wider guide to HMRC loans.
Can accountancy practice tax funding cover VAT as well as partners' income tax?
Yes, lenders can fund a practice's VAT return, corporation tax or partners' self-assessment bills, either separately or within one facility. The post-deadline billing surge often creates the largest VAT bill of the year before those fees are collected, so some firms fund the VAT quarter alongside January's personal tax. Each liability is assessed on the firm's cash flow and track record. See our page on VAT loans for how that funding works.
To sell an accountancy practice, decide first whether you are selling a block of fees, the whole firm or an internal…
Speak to a broker
Discuss your requirement
Tell us what the funding is for. We search our panel of 300+ lenders, structure the case and approach the ones suited to it. No obligation, and free to enquire.
