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 25%. For many organisations, paying this tax in full by HMRC's deadline can cause cashflow problems and even prevent investment in growth, but there is another way.
A corporation tax loan can be used to pay your corporation tax bill for the current year (or any past years that are still owed), enabling you to keep more cash in your organisation while avoiding late payment penalties from HMRC (which also protects your credit rating).
You then repay the loan via affordable, fixed payments spread over a period of time, enabling you to manage your budget and prevent cashflow issues.
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Using a commercial loan to pay corporation tax bills to reduce the impact of costly late payment fines can be a cost-effective way to utilise cashflow and resources.
A corporation tax loan will incur interest, but it enables the organisation to spread their bill over 6 to 12 months through fixed monthly or quarterly payments. The loan can be secured or unsecured.
Common reasons for using a corporation tax loan include:
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.
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.
It is important to consider that there will be interest to pay on the corporation tax loan, but this interest will be factored into your fixed repayment plan.
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.
From tax loans to asset finance and cashflow solutions, we can help you to secure the right finance for your short-term challenges and long-term ambitions.
You can get started on your application today via the Bluestone Portal.
Contact us today to learn more about how we can support you with your corporation tax, or you can email our Commercial Loans Specialist directly at james.lewis@bluestone.app.
Corporation tax is a direct tax that businesses must pay as soon as they start making a profit and then on an annual basis thereafter. The corporation tax rate is set by the government. All limited companies must pay Corporation Tax annually. From 1 April 2023, the Corporation Tax main rate for non-ring fenced profits will be increased to 25% applying to profits over £250,000. A small profits rate (SPR) will also be introduced for companies with profits of £50,000 or less so that they will continue to pay Corporation Tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
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Using a commercial loan to pay corporation tax bills to reduce the impact of costly late payment fines can be a cost-effective way to utilise cashflow and resources. A corporation tax loan will incur interest, but it enables the business to spread their bill over 6 to 12 months through fixed monthly or quarterly payments. The loan can be secured or unsecured.
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