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Corporation tax is always due as a lump sum. Your firm may be liable to pay a significant amount in corporation tax that can take significant liquidity away from other areas of your business, which can hamper growth or create financial challenges.
Paying Corporation Tax bills as a lump sum can also impact upon the availability of capital within the business that may be required for covering operating expenses or taking advantage of growth opportunities. This is particularly relevant for companies experiencing growth that have projects requiring investment in or businesses experiencing a temporary downturn in revenue.
At the most basic level, you may also find that from a financial and accounting perspective: it may be better for your business to repay your Corporation Tax in tranches (due to your lender as a fixed amount) rather than as a lump sum.Request a Callback
In the UK, Corporation Tax is set at a fixed rate of 19%. All UK companies (including UK branches of multi-national companies) are liable to pay income tax on your trading profits, assets you have disposed of at a profit during the fiscal year, and investments. Companies with international offices headquartered in the UK must pay income tax on both UK and global profits.
Corporation Tax is payable to Her Majesty's Revenue and Customs department (HMRC). You will not receive an invoice for the Corporation Tax your business is liable to pay, but instead, you will need to work out what you owe via your company's accounts.
You will use your accounts to prepare a Company Tax Return, which will effectively indicate what you owe in Corporation Tax. You will have to pay Corporation Tax by a specific deadline – usually (at the latest) nine months and one day from the end of your company's accounting period.
Corporation Tax in the UK is fixed at 19%. You will pay this on your profits, investments and assets you have sold at a gain. From 1st April 2023, the UK’s Corporation Tax rate will increase to 25% for companies with profits over £250,000. Companies that make less than £50,000 profit will remain at the current 19% rate after this date, and the small profits rate will apply to companies with profits of not more than £50,000. Marginal relief will be available for companies with profits of more than £50,000 and up to £250,000, with the 25% rate effective thereafter.
Corporation Tax loans will see your lender cover your corporate tax liability, and you will repay your lender over the loan term. The advantages of this type of finance are:
Enness can broker Corporation Tax loans very quickly, which is helpful if you are coming up to your deadline. However, as with any type of corporate finance, it is essential to note that your business must be in a solid financial position to access these loans. Lenders will want to be confident that you can repay them and plan how you will do this. You will need to provide clear documentation and supporting evidence that shows you will be capable of repaying the loan and will not default.
Lenders offer Corporation Tax loans as secured and unsecured loans. Unsecured Corporation Tax loans allow you to borrow without putting forward any additional collateral. Secured Corporation Tax loans will require you to put forward some kind of security. This can be a personal guarantee, company assets or property, stock, machinery and so on.
Unsecured Corporation Tax loans tend to be more expensive because there is more risk to the lender, given they don't have any collateral to fall back on if your corporation defaults on the loan. That said, for many businesses, taking an unsecured Corporation Tax Loan at a slightly higher rate is more advantageous than a secured loan, given it offers more flexibility.
Unsecured Corporation Tax loans are reserved for liquid and successful companies with strong balance sheets, and that can demonstrate an excellent financial position. If your business has little liquidity or is not in such a strong situation with regards to revenue, cash flow or for other reasons, most lenders will tend to offer secured loans, giving them more security if you default on your loan.
Corporate tax loans can be arranged very quickly. Enness can arrange approvals in as little as 24 hours, and in many cases, you will be able to draw down loans for your business in a couple of days or less than a week.
Sometimes, businesses take out a corporate tax loan not because they can't pay the liability but because they want to retain capital in the company for other purposes or manage cash flow more effectively. You may benefit from a corporate tax loan because your company will repay it in fixed instalments to your lender.
Lenders are open to these scenarios and, in many cases, prefer these situations as opposed to businesses that can't cover their liability for other reasons.
You can also use corporate tax loans to help avoid late payment fees and interest due to HMRC if you are late in paying your Corporation Tax bill.
Corporate tax loans are available for UK businesses of all sizes – from SMEs up to larger corporations. You can benefit from a corporate tax loan regardless of your sector.
There are several excellent lenders in the market focussed on this niche area of business loans.
If you need a high-value loan to cover your Corporation Tax liability, you will most likely need access to niche lenders, as not all lenders that operate in the space can offer large loans. Many lenders prefer smaller loans or working with smaller businesses and have a cap on lending. That said, several lenders offer large Corporation Tax loans, and it is possible to negotiate rates and terms. How you present your application here is invaluable, and Enness will be able to support you do this in a way that puts your case in the most favourable light.
Speed will also be a key consideration. If you are coming up to your Corporation Tax deadline, you will want to ensure you can access finance quickly. Enness can arrange offers in as little as 24 hours and quickly complete loans on your behalf – often in less than a week or just a few days. Working with a broker like Enness, who can unlock liquidity and keep a deal moving in the timeframe you need, will be critical for your success when you are against the clock.
A specialist lender is often the best way to secure high-value corporate tax loans. There are several options at the top of the market, but many players that operate in the space require introductions or don't offer direct contact routes – you will need to have a referral.
The first step is always to get in touch with Enness. Your broker will discuss your requirements and will look to understand more about your corporation and how much you need to borrow. Your broker will also ask basic questions about your business to understand your financial position and suitability for this type of finance. If necessary, or if it is helpful, your broker will also explore other options with you. Sometimes different types of corporate finance may also be an option for you, depending on your needs and your business.
Your Corporation Tax broker will then approach lenders on your behalf to secure initial offers. Depending on how much information and documentation you have shared, your broker may also be able to negotiate for you at this point. Your broker will collect offers (two or more wherever possible) so that you can compare rates and terms. Your broker will talk you through each offer and explain any differences and potential drawbacks and advantages of each, so you can make an informed decision about what the best offer is for you. Enness is an independent broker and will be able to access the whole market on your behalf, seeking out the best deal for you.
When you are ready, Enness will reach out to your chosen lender and communicate that you would like to go ahead with the deal. Your broker will help you with your application and work alongside you to complete the deal as quickly as possible. In most cases, your lender will want to pay the Corporation Tax to HMRC on your behalf to ensure that the funds are used exclusively for this purpose.
You will repay your lender the loan capital and interest over a fixed period – usually twelve months, but Enness can negotiate other terms if you wish. Corporation Tax loans cannot usually be more than twelve months in term, but if it is beneficial to you to opt for a shorter loan term, you will be able to do so.
Corporation Tax loans are available to UK businesses. Many different types of companies use corporate tax loans. There is no limit to what size business can access this type of finance – small and very large companies can opt for this type of finance, and loans are on offer from around £10,000. Enness operates at the top end of the market, brokering larger corporate tax loans of £100,000 and above. However, your broker can help you arrange finance regardless of what kind of industry you operate in or the size of your corporation.
You will need to have been trading for at least twelve months to be eligible for this type of finance.
Corporation Tax loans are competitively priced, but what you will pay will depend on your lender, the amount you are borrowing, and the strength of your company's financial situation. Enness will always work to minimise overhead costs and negotiate a Corporation Tax deal that is as cheap as possible while still securing the best terms for you.
Lenders can consider various scenarios. A Corporation Tax loan is usually very straightforward if you are in a strong financial position with good revenue and liquidity. Usually, unsecured loans will be an option, especially if you are looking for a loan to support cash flow management, rather than because you cannot pay your Corporation Tax liability.
That said, lenders can also consider loans if you currently have little liquidity or cannot currently cover your Corporate Tax bill. Here, they will want to see details on how you will repay the loan and ensure that you have sufficient revenue to cover your operating costs and liabilities. If extenuating circumstances mean that you cannot currently pay your Corporate Tax bill, but you will be better positioned with more liquidity in the short-term, Enness will be able to bring this to the lender's attention and highlight how your company's situation will improve. If there is currently little liquidity within your business, lenders will usually want some additional form of collateral and will offer a secured loan.
In addition, lenders will also want to see:
Enness specialises in brokering high-value corporate finance, including Corporation Tax loans. The team can broker anything from loans of £100,000 up to £1 million or more.
While Corporation Tax loans can be arranged quickly, accessing and negotiating finance for your own business is not always easy. You may not have access to the lenders that will offer you as much as you need to borrow, or you have certain circumstances that mean you need to present your case to lenders in a specific way. You may also want to work with a broker if you need to access finance quickly – if your deadline is approaching very fast, for example.
You may also want to work with Enness if your circumstances have made it challenging to access Corporation Tax loans. This may be if you need to borrow a significant amount, have good revenue but a comparatively small client base (lenders want to ensure your security of long-term revenue), or operate in a niche industry. It can also be helpful to work with a broker if you haven't raised finance or experienced a recent drop in revenue.
Enness will always start by understanding your needs – this helps your broker know what they need to communicate to lenders and how to present your case. Often, providing lenders with additional information and documentation or explaining more about your situation will be helpful in this respect as it will help provide comfort in your ability to repay the loan.
Enness will always work quickly, whether you have a short deadline or not. Your broker will deliver negotiated offers for your review within a few working days and in 24 hours wherever possible.
Aa an independent broker, Enness has access to more than 500 lenders. Many of these institutions do not publicise their offering or actively prefer introductions from brokers, who can vet clients for them in the first instance. By working with Enness, you will have access to the whole market when it comes to accessing offers from lenders who provide Corporation Tax loans.
Lenders cater to different parts of the market, but ultimately, it is possible to borrow significant amounts - £1 million or more. It is not possible to borrow more than your outstanding Corporation Tax liability. However, you can also borrow less if you have some liquidity in your business that you want to put towards your outstanding payment.
What your business can borrow will depend mainly on your company's financial situation and how strong a case you have for borrowing. If you have good financial standing and can demonstrate you will have solid revenue in the future, it is possible to secure your Corporation Tax liability in its entirety. If you are experiencing a seasonal dip or because you are experiencing a loss in revenue that has meant you could not accrue your liability, you may not be able to borrow as much.
If you want a better understanding of what you can borrow – get in touch. Initial conversations are always carried out on a no-obligation basis. Your broker can talk to you in more detail about your individual situation, financials and how lenders will view your case. Your broker can give a more accurate figure of what you will be able to borrow or what will need to happen for you to maximise your Corporation Tax loan.
Enness is a high-value finance broker with a track record of brokering Corporation Tax loans. The team will be able to broker this type of finance for you exceptionally quickly, and you will usually be able to draw down loans in just a few days.
Contact Enness to have a no-obligation chat about your needs. Enness will talk you through how a broker can help you negotiate and secure Corporation Tax finance quickly and efficiently.Schedule A Callback