Premium Credit is helping achieve growth for its credit broker partners as more businesses look to spread the cost of corporation tax and wider tax liabilities. Karl Leitelmayer, Sales Director - Tax, Premium Credit (Specialist Lending) outlines the opportunity.

Today
With UK corporation tax bills hitting a record £84bn last year*, businesses are finding it increasingly difficult to meet their tax liabilities. It comes as corporation tax rates were raised from 19% to 25% on April 1st 2023, an increase of almost a third.

Results from Premium Credit’s 2024 Tax Index also indicate that over 430,000 SMEs are currently struggling to pay tax bills. Firms are having to consider alternative strategies such as cutting jobs or bringing in new investors to help them meet this cost. Further data from the Index shows one in seven (14%) say they have found it challenging to pay a tax bill in the past 10 years.

Whilst some businesses are finding it hard to meet their tax obligations, others simply want the convenience of this solution or to use their capital more effectively avoiding the impact of paying tax bills in one large, annual lump sum.

Spreading the cost
As an award-winning funder of Tax finance, we offer instalment options to cover Corporation Tax, as well as Self-assessment and VAT bills allowing credit brokers’ customers the opportunity to spread the cost of their liabilities for up to a year. This helps with:

Cash Flow Management: Spreading tax payments over a longer period helps businesses manage their cash flow more effectively. This is particularly important in times of economic uncertainty or when businesses face unpredictable income streams. By spreading out the payments, brokers’ customers can avoid large lump-sum payments that could strain their finances.

Economic Uncertainty: The UK economy has faced significant challenges in recent years, including Brexit, the COVID-19 pandemic, and more recently inflationary pressures and the cost of living crisis. These factors have created a more volatile economic environment, leading businesses to be more cautious with their finances. Spreading corporation tax and wider tax payments allows companies to retain more cash on hand to deal with unexpected expenses or downturns in revenue.

Rising Corporation Tax Rates: As a result of the recent rises in corporation tax levels, businesses are likely to see higher tax bills over coming years, making the option to spread payments more attractive to avoid the impact of a substantial one-off payment.

Risk Management: Spreading tax payments reduces the risk of financial strain in the event of unforeseen circumstances, such as economic downturns or operational disruptions. This approach helps businesses avoid the possibility of falling into arrears with HMRC, which could lead to penalties or interest charges.

Overall, spreading the cost of tax bills has become a practical and convenient strategy for UK businesses to navigate financial uncertainties and maintain liquidity in a challenging economic environment.

Payment options
Businesses can spread the cost of tax bills with Premium Credit for a small fee. This option helps them to pay bills on time and improve cash flow when it is needed.

Credit brokers’ customers with a tax bill over £10,000, can apply for this credit facility. There are no application or arrangement fees for using the service.

A simple application makes the approval process straightforward without the need to provide supporting income projections.

Brokers benefit from attractive commission rates.

Why choose Premium Credit?
Premium Credit has been working with credit brokers’ 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 amongst credit brokers is +62, which places us comfortably in the +50 ‘Excellent’ NPS benchmark.

Those who partner with us are in good hands. Each year, Premium Credit lends more than £5 billion across its business lines and services well over 2 million customers through a network of almost 3000 partners.

We have a dedicated tax team to help brokers access Premium Credit’s internal processes reducing the administrative burden 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.

Make contact
Corporation Tax season is upon us so if you need more information, please reach out to myself or Richard Crossland, Premium Credit’s Head of Credit Broker 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

*Accountancy Today