Everything’s expensive and I can’t pay my tax bill. Help!
There is no denying that things are getting more expensive. With rising bills, falling retail sales and inflation rates close to double figures, it’s unsurprising that business owners are feeling the pinch. Staff salaries, utility bills, rental costs and invoices won’t wait, and the addition of a September tax bill for companies whose tax year follows the calendar year is a pressure that many would rather do without. If you are in this position, it might be a good time to consider making use of a tax loan.
Taking out a tax loan can ease the discomfort of making HMRC payments by enabling a company to spread their costs. Businesses can make monthly payments either directly to HMRC or to a bank account ready for looming tax deadlines. Usually, tax loans are taken over a year. These 12 affordable monthly payments are far more manageable, helping businesses to avoid late payment penalties or from falling into arrears with HMRC which can be hugely damaging to a company’s credit score and potentially fatal if not addressed.
Late penalties are charged by HMRC if a business cannot pay their taxes. Charges apply from the date the payment is late, and gradually accrue interest. Of course, these charges and the interest owed increase the total amount owed to HMRC, therefore often leaving the business in a far more difficult financial situation in a relatively short period of time.
The current economic challenges that the UK economy is facing make it more likely that many business owners will struggle to pay their tax bills, even if they have made some provision over the past 12 months, particularly if reduced consumer spending affects income. No company wants to be hit by this. Taking out a tax loan can ensure that a business is in a better position to pay its bills and run operations without disruption.
How could a tax loan help my business deal with the current economic crisis?
The benefits of tax loans are considerable, particularly if your business has been impacted by the current economic climate. It’s best not to rely on cash reserves for tax purposes, so utilising a tax loan is a good way to stay on top of your finances. While it may be tempting to dip into cash reserves, or to reduce workforce or stock to save cash as a short-term solution, this approach could exacerbate an already tricky situation and delay a return to full productivity in the long-term. Although it may sound counterintuitive, it is often better to borrow and ring-fence reserves to keep business ticking over as usual.
Having a fixed monthly payment over a known repayment duration helps businesses to stay in control of cashflow. From micro-businesses to much larger companies, it is far easier to pay an affordable amount each month, rather than waiting for an annual deadline and a sizeable figure with a fixed deadline.
Another way to think about a tax loan is what an improved cashflow would mean for your business? Whether you are thinking about future growth, expanding your team, or simply want to be better prepared for the predicted tumultuous economic ride the next few months may bring, now is the time to get ahead. Smaller, more affordable payments every month allow greater consistency, enable planning and growth, provide increased spending power and ensure less anxiety for company directors about the inevitable arrival of tax bills.
Tax loans can also be used retrospectively. If large tax bills have recently been paid by your business and the impact on cashflow is greater than you feel comfortable with, particularly with the changing business forecast, a retrospective tax loan is worth considering. With energy and labour costs in particular expected to rise further this year, taking this proactive approach to your finances is key.
In addition to economic uncertainty, there are always external factors which are out of a business’ control. A large tax bill arriving at the same time as a recession, rising costs and a limited cashflow is far from ideal. The best way to ensure resilience in these circumstances is to be prepared. If concerns about HMRC bills are keeping you up at night, a tax loan could well be the solution for you.
Tax loans can be arranged digitally, quickly and easily with most applications typically taking just 24 hours, so the peace of mind that a tax loan brings isn’t far away.
What can I use a tax loan for?
Business owners can opt to take out a tax loan for a multitude of tax types. Whether it’s a sole trader paying income tax following a self-assessment, or a larger, limited company paying VAT and corporation tax, these loans offer an organised and sensible solution for dealing with often hefty bills. Capital gains and inheritance taxes can also be covered by a tax loan.
Tax loans can be used by sole traders, partnerships and members of limited liability partnerships, provided they have been trading for over a year and have at least one full set of financial reports. Funding is available from £2,000 with no upper limit.
The current wave of financial difficulties is impacting business confidence – and their accounts – across the UK. Being proactive to create a resilient approach is key to ensuring your company can weather the storm. Taking out a tax loan can provide a practical way for business owners to stay organised and keep finances in good order.
