New tax changes and wider operating challenges are hitting cash flow for many UK businesses. Karl Leitelmayer, Premium Credit’s Sales Director – Tax outlines how Credit Brokers can reduce the impact for their customers.
Escalating costs - the current situation
Many firms in the UK are facing a higher tax burden in this new financial year caused by increases to employer national insurance contributions; business rates; vehicle taxation and excise duties amongst a range of tax hikes. The Chancellor’s Spring statement confirmed the key areas affected. These tax rises will put a considerable, additional strain on cash flow for many. Small businesses are also at risk of being pulled into VAT compliance through inflation-driven growth which inevitably impacts their cash reserves.
Beyond increases to key areas of taxation, operational costs are also spiralling. Increases to statutory pay requirements for employees is a major factor which will affect cash flow for all firms. In addition, issues like ongoing adjustments to regulatory requirements are also creating a financial burden.
This next financial year is going to be tough. Businesses are already having to contend with high interest rates, supply chain disruptions, and broader economic uncertainty all adding to business costs. These factors, amongst wider concerns, mean companies need to adapt their financial strategies, reassess workforce costs, and explore efficiencies to maintain profitability in what is undoubtedly a more challenging fiscal environment.
The way businesses pay VAT and wider taxes is one key area in which firms are re-evaluating. Premium Credit has an option to help with this.
Paying VAT bills in instalments can improve cash flow
Our finance facility enables credit brokers’ customers to spread the cost of VAT and other taxes like self-assessment and corporation tax. It allows businesses to manage their cash flow more easily by allowing them to pay in smaller, more manageable instalments rather than in a single lump sum.
This approach reduces the immediate financial strain, ensuring businesses retain working capital for essential operations such as payroll, inventory, and investment in growth initiatives. By spreading tax payments over several months, companies can better align their expenses with revenue cycles, preventing cash flow disruptions that might otherwise result from large, single tax payments.
Additionally, financing VAT and some wider tax liabilities through Premium Credit can provide businesses with greater financial flexibility, helping them avoid the need to dip into reserves or take on more expensive short-term loans.
Instead of facing potential penalties for late payments or struggling to cover multiple financial obligations at once, businesses can maintain liquidity while ensuring compliance with tax deadlines. This strategy is particularly beneficial for SMEs and seasonal businesses that experience fluctuations in income, allowing them to smooth out cash flow variations and allocate funds more effectively across operational needs.
What are the additional benefits for credit brokers?
By enabling business customers to spread the cost of VAT and other tax liabilities, brokers can make tax obligations more manageable and predictable, helping strengthen customer relationships. In my experience, businesses are more likely to return to a credit broker who offers practical solutions to their cash flow challenges. Additionally, by facilitating access to a finance option such as this, brokers can expand their service offerings, attract new clients, and generate additional revenue streams.
Offering tax financing can also position brokers as trusted advisors, differentiating them from competitors who may only focus on traditional lending products. Businesses seeking tax financing often have other borrowing needs, such as working capital loans or asset finance, creating cross-selling opportunities for brokers.
This innovative payment solution can also benefit brokers by facilitating repeat business, building long-term customer loyalty and a steady stream of revenue. By integrating Premium Credit’s finance facility for tax payments, brokers not only have the opportunity to enhance their value proposition but also contribute to their own business growth and stability.
Paying monthly is a simple, straightforward, cost-effective process. We are proud to support our community of customers and broker partners in this way.
Key features at a glance:
- We finance tax bills from £10k to £15m deal values (few funders can accommodate business of this size)
- Monthly repayment option for clients of 6, 10 or 12 months (VAT is 3 months in line with the next VAT payment)
- We pay HMRC directly or provide a reimbursement if the client has already paid
- No Personal Guarantees needed up to £150k
- Funding is always unsecured
- Simple processes
- A revolving credit agreement ensures smoother renewals, creating a recurring revenue model for brokers
- Nationwide coverage
- Competitive pricing
- Up to 9% commission for brokers
Act now
Despite difficult trading conditions for many businesses, Premium Credit provides a practical way for Credit Brokers’ customers to spread the cost of their tax bills whilst providing an additional income stream for brokers.
To find out more, please reach out to me or Richard Crossland, Premium Credit’s Head of Tax or one of our dedicated Account Managers on 0207 191 2079 or via tax@pcl.co.uk
https://www.premiumcredit.com/products/tax-and-vat
