This week’s guest blog is from a previous exhibitor at financeSHOWCASE, Bluestone.
What is a Corporation Tax Loan?
Every year eligible organisations in the UK have to pay tax on their profits. This is called Corporation Tax and is currently set at a main rate of either 19% or 25%, depending on the organisation’s turnover.
Paying Corporation Tax in full by HMRC’s deadline can often lead to cashflow problems, preventing investment in growth, but there is another way.
A Corporation Tax loan can be used to pay your bill for the current year (or any past years that are still owed) in full by the deadline, avoiding late payment penalties from HMRC and protecting your credit rating.
You then repay the loan via affordable, fixed payments spread over a period of time, enabling you to keep more cash in your organisation, manage your budget more easily and prevent cashflow issues.
Why use a corporation tax loan?
Using a loan to pay Corporation Tax bills can reduce the impact of costly late payment fines and boost cashflow.
A Corporation Tax loan enables your organisation to spread the bill over 6 to 12 months through fixed regular repayments. The loan can be secured or unsecured.
Common reasons for using a Corporation Tax loan include:
- Spreading the cost of a tax bill, retaining capital and therefore spending power, which in turn can allow for increased competitiveness, growth and expansion.
- Maintaining a stable and fluid cash flow so they can take advantage of new opportunities and/or fund unexpected costs or drops in income.
- Avoiding the risk of high penalties from HMRC for late or non-payments.
Is a corporation tax loan the right choice?
Corporation Tax loans allow organisations to spread the cost of their tax liability over a longer period, which can make it easier to manage their finances throughout the year and avoid penalties and interest charges for late payments. This can also help to protect a company’s credit rating and save them money in the long run.
These tax loans can simplify your accounting processes as you can pay a lump sum to cover your tax liabilities. This can be a more straightforward way of managing tax payments than tracking multiple payments throughout the year.
Considerations
Taking out any commercial loan should be approached with caution as if your business’ finances are not in a healthy condition, there is a risk of getting into more debt.
Failing to keep up with repayments can impact your organisation’s credit score and damage future finance applications.
It is important to consider that there will be interest to pay on the Corporation Tax loan. This interest will be factored into your fixed repayment plan, but you will pay more overall than you would do when settling the bill outright with your own capital.
Why Choose Bluestone?
At Bluestone we are committed to your success, whether you’re a sole trader, running an SME or seeking finance for a multinational corporation.
As an independent, award-winning team of finance professionals we take pride in our ethical and consultative approach when securing finance to unlock your organisation’s potential.
We make things simple, move quickly, offer exceptional value and make funding happen where others can’t.
Learn about corporation tax and other finance tips at financeSHOWCASE – get your FREE tickets here:
