Our Lenders
We work with trusted brokers to give you access to a panel of leading lenders well placed to meet your needs at the lowest rates.
No matter how prepared you are, tax season can creep up on you and take you by surprise. You might be hit by an unexpected tax bill that leaves you questioning how you will pay for it. Using a personal loan to pay your tax bill could be a good option to reduce the burden of your tax without taking a hit on your cash flow.
What Happens If You Cannot Pay Your Taxes?
If you think you might be unable to pay your tax bill, your first action should be to speak to HMRC as soon as you can as you may be able to delay your payment.
You might be able to come up with a ‘time to pay agreement’ which will either give you more time to pay or enable you to schedule your tax payment in instalments.
The sooner you are able to arrange a payment or organise a loan, the better – one the deadline has passed, it is usually more difficult to come up with an agreement.
If you make a late payment, HMRC will continue to charge interest for however long it takes before you are able to repay starting from the first day of late payment.
You will also incur penalty fees – once when the payment is 30 days late, then again at 6 and 12 months. Penalties are 5% of the original amount owed to HMRC. HMRC will also charge interest on penalties.
What is a Tax Loan?
Tax loans are a type of unsecured loan which can help you spread the cost of your tax obligations into more manageable monthly payments rather than paying in one big lump sum.
The payment can be set up to be paid directly to HMRC or you can choose to send it to a particular bank account. These loans are designed to help you pay your tax bill on time and, subsequently, avoid any HMRC late penalties.
What are the Benefits of Using a Loan To Pay A Tax Bill?
If you choose to use a loan to pay a tax bill, there are many advantages that you may not have considered.
- Borrow Enough Money To Repay Your Tax Bill
The minimum amount available for a personal loan will vary between lenders but is typically between £500 and £1,000 with a maximum amount of as much as £50,000 (again, depending on the lender and your creditworthiness). If you have a good credit score and can demonstrate a steady income, you are likely to be able to qualify for a bigger loan amount. The large amounts available with a personal loan make it a good option if you want to cover a hefty tax bill.
- Avoid any penalties from HMRC for late payments or non-payment
If you make a late payment for your HMRC tax bill, or you fail to make the payment, HMRC will charge additional daily interest on the outstanding amount until you are able to pay the bill. With a current interest rate for late payment at 2.75%, this can soon become extremely expensive. If you manage the tax bill with a loan, you avoid these penalty fees and it could end up being far cheaper for you.
- Stay away from your savings
If you are faced with an unexpected tax bill, the most logical option may be to dip into your savings. However, this could harm your financial future and could put you at high risk in case of emergencies. Using a personal loan to cover the tax bill means that your savings are left untouched and you will still have an emergency fund for the future.
- Improve cash flow
Whether you are an individual or a company, shelling out a large amount of money to cover a tax bill could you leave you cash poor meaning that your spending options are limiting. Taking out a loan to cover your tax bill means that you will have improved cash flow allowing for increased spending and investment for other things. If you have a company, this could mean putting money towards company growth.
- Manage payments
The fixed monthly payments that come with a loan make it easier to budget in the long run and spread the cost of the tax bill over an extended period of time.
Are There Any Risks Of Using a Loan To Pay A Tax Bill?
Depending on your personal financial circumstances (for example, your credit score and income), you could end up paying a lot of money on interest rates for your loan. Typically the higher your credit score, the better rates you will receive. This means that if your credit score is less than perfect, you may want to consider whether taking out a loan to cover a tax bill is an affordable option as it could cost you a lot in the future.
Another risk of taking out a loan to cover a tax bill is that it could increase your debt-to-income ratio. Your debt-to-income ratio is an indication of how much debt you currently have compared to your monthly income. If you take out an additional loan and your income has not increased, the ratio shifts and your debt-to-income ratio increases. This will affect your ability to qualify for a loan or a mortgage in the future.
Why Work With Proper Finance To Get a Loan To Pay Your Tax Bill?
At Proper Finance, we can help companies and individual borrowers maximise their spending power by finding them the most suitable funding options for their personal financial circumstances. If you are seeking a loan to pay your tax bill, we can offer expert advice. We work with a range of lenders from all over the country and will strive to find you the best loan to suit your specific needs.
How Much Can I Borrow?
The exact amount that you can borrow will depend on the lender and also on your creditworthiness. We work with hundreds of lenders who can consider your personal circumstances based on a range of factors – not just credit score.
How Quickly Can I Receive Funds?
Once your loan is approved, you can receive the funds on the very same day with the funds arriving into a bank account of your choice, or directly to HMRC within 24 hours of approval.
How Can I Apply For A Tax Loan With Proper Finance?
If you would like to apply for a loan to pay your tax bill, let us know the amount of your tax bill and the repayment term that you would prefer. We will match you with the best lender to suit your personal circumstances, offering a tax loan with the right repayment period at the most affordable rates. Once your loan has been approved, we can set up the funds to arrive within 24 hours.