Tax bills

Spread the VAT bill
instead of emptying the account

A quarterly VAT bill or an annual corporation tax payment can take out a month of working capital in a single transfer. Borrowing to pay it spreads the cost over months you can plan for, and keeps the cash in the business where it is earning.

Get my options Work out the repayments

No credit check to enquire.

Before you borrow

Read this first, because it may save you the interest

Ask HMRC about Time to Pay first
HMRC will often agree an instalment plan directly, and the interest they charge is usually lower than commercial borrowing. It is genuinely the first call, and we would rather tell you that than place a loan you did not need. You can set one up at gov.uk or by phone.
Where borrowing wins anyway
Time to Pay is not automatic, it can require disclosure you would rather not make before a funding round or a sale, and a default on it is worse than a missed loan payment. A facility arranged in advance is certainty, which is sometimes worth paying for.
It is an ordinary business loan
There is no special HMRC product here. You are borrowing on normal terms and paying the bill yourself, which means the cost is the ordinary cost of business borrowing. What that is.
Match the term to the cycle
A VAT bill repaid over three months leaves you clear before the next one lands. Spread the same bill over two years and you will be paying for it alongside seven more.

Time to Pay, next to borrowing

HMRC will often agree instalments directly. It is usually the cheaper of the two and it is the first call. These are the trade-offs, honestly.

HMRC Time to PayBorrowing to pay it

Interest7.75% a year (Bank Rate + 4)Roughly 6.9% to 24.3% a year, set by your accounts

Credit searchNoneYes, once you apply

CertaintyNot guaranteed — HMRC decides, and can refuseAgreed before the bill falls due

What you discloseYour finances, to HMRCAccounts and bank statements, to a lender

If it goes wrongEnforcement action, and it is harder to agree a second timeA missed payment on a commercial facility

SpeedDays, sometimes weeksOften the same day

HMRC charges Bank Rate plus 4 percentage points, which is 7.75% as at 9 January 2026 and moves whenever the Bank does — the current figure is on GOV.UK. Interest keeps running under a Time to Pay arrangement; it is instalments, not a holiday, which is the part most people have wrong.

Ask HMRC first, then ask us. We will tell you honestly which is cheaper for you.

Get my options

FAQ

Common questions

Can I borrow to pay a VAT bill?

Yes. Lenders treat it as ordinary working capital and most do not restrict what the money is used for. You pay HMRC directly; the loan is between you and the lender.

What about corporation tax or a PAYE bill?

The same applies. Any tax liability can be funded this way, and the choice of term usually matters more than the choice of lender.

Will HMRC know I borrowed?

No. You are simply paying the bill. There is no notification and no flag on your record.

Is it cheaper than HMRC interest?

Often not. HMRC’s late payment interest is frequently below commercial rates, so if Time to Pay is available to you it is usually the cheaper route. Borrowing buys certainty and privacy rather than a lower rate, and we will say so.

Rather talk it through? Call 0333 772 4865 →

See what spreading it would cost

One enquiry, no credit check, and the cost in pounds before you decide.