The UK Tax and VAT marketplace is currently worth circa £190bn annually with £3-£5bn financed each year. Richard Crossland, Premium Credit’s Head of Tax, provides insight into the opportunities this creates for credit brokers.
The current situation
With interest rates in the UK at 5.25%, inflation still well above the 2% target, a ‘technical’ recession upon us, and an upcoming general election, economic uncertainty abounds and business leaders are having to manage cash flow with even more care in this challenging environment.
The payment of VAT and other tax obligations remains a significant drain on capital for many firms. Despite some welcome changes in the last budget like VAT thresholds increasing from £85,000 to £90,000, larger companies still face sizable VAT costs and the wider tax bills applicable to all firms. Savvy business owners are turning to wider options to meet the cost of tax bills – effective use of credit is one.
Meeting the cost of tax bills
UK businesses are increasingly spreading the cost of tax bills to better manage cash flow. By paying tax invoicing over time through an instalment solution, businesses can avoid sudden cash flow crunches and maintain stability in their operations. Additionally, spreading the cost of tax allows businesses to better plan and budget for their wider financial obligations, and avoid the risk of late or missed payments and the potential penalties this brings from HMRC. It's a smart strategy aimed at improving financial management and ensuring sustainability in the face of tax obligations.
Flexible payments for credit brokers' customers
Making tax bills a manageable, monthly outgoing rather than a single, large annual lump sum payment can significantly help businesses to perform better enabling capital to be spent in other business-critical areas.
Premium Credit provides this solution, not only giving a valuable service to business customers but also triggering commission for brokers of up to 9%. Our broker partners are taking up the opportunity in large numbers. We’ve seen a 145% increase in agreements being fulfilled on behalf of brokers’ customers in Q1 2024 compared to the same period in 2023.
As this increased uptake illustrates, a financing facility is an attractive option to pay VAT and wider taxes. Premium Credit’s payment plan directly funds HMRC billing in full and on time allowing businesses to meet the cost, but also helps make financial planning easier and protects cash flow. It’s a serious consideration for firms looking to maximise income.
Quarterly and annual tax liabilities can put a strain on a business’s cash flow, so it makes sense to align these payments with other monthly expenditures and help free up capital for business growth.
Premium Credit offers flexible VAT, Corporation Tax and self-assessment solutions allowing brokers’ customers to spread the cost of their liabilities for up to a year. Paying monthly is a simple, straightforward, cost-effective process. We are proud to support our community of customers and partners in this way.
Why choose Premium Credit?
Premium Credit has been working with credit broker customers in the UK and Ireland for over 30 years. Our Net Promoter Score results (UK) show we continue to do this to a high standard. Premium Credit’s score for our credit brokers is +61, which places us comfortably in the +50 ‘Excellent’ NPS benchmark.
Each year, Premium Credit lends more than £5 billion across its business lines and services over 2.6 million customers through a network of almost three thousand partners. We have a dedicated tax team to manage and deal with Premium Credit’s internal processes reducing the administrative burden for brokers with an online tax portal for easy submission of deals. Our flexible, human, manual underwriting approach also means decisions are not made by algorithms, helping to get even the most complex deals across the line.
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 Broker 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 Karl Leitelmayer Premium Credit’s Sales Director – Tax, one of our dedicated Account Managers on 0207 191 2079 or via tax@pcl.co.uk
https://www.premiumcredit.com/products/tax-and-vat
