Can a lender defer my VAT payment with HMRC?

No. Only HMRC can defer VAT payments or approve Time to Pay arrangements. Lenders can provide funds to help you meet VAT liabilities, but they cannot change statutory tax deadlines.

What financing options can cover a VAT bill?

Common options include short-term business loans, tax or VAT-specific loans, invoice finance, overdrafts, merchant cash advances and including VAT within equipment finance agreements. Each option has different costs and eligibility criteria.

Should I contact HMRC before seeking finance?

Yes. Always speak to HMRC first to see if a Time to Pay arrangement is available. If HMRC cannot or will not defer the bill, financing can be a practical alternative but involves borrowing costs.

Do providers offer VAT deferral or can VAT be financed?

Quick answer

HMRC is the body that can grant VAT deferral or Time to Pay arrangements, not commercial lenders. Lenders and specialist finance providers cannot “defer” VAT on HMRC’s behalf, but many businesses can finance their VAT bills using short-term loans, tax funding products or by including VAT in equipment finance agreements. Best Business Loans helps match UK businesses with lenders and brokers who can offer these financing options and explain the trade-offs.

Who can actually defer VAT?

HMRC is the only authority to defer VAT

VAT deferral or formal agreement to delay payment is a function of HM Revenue & Customs (HMRC). Only HMRC can approve a deferral, time-to-pay plan or other concession for statutory VAT liabilities. If you believe you need extra time, contact HMRC first because interest and penalties often apply without a formal agreement.

When HMRC has offered deferrals

HMRC has, at times, introduced time-limited deferral schemes (for example during national crises). Outside such schemes, HMRC still offers Time to Pay arrangements on a case-by-case basis for businesses that cannot meet VAT liabilities. Eligibility and conditions vary, and HMRC will usually require a demonstration of financial difficulty and a realistic repayment plan.

Can lenders or brokers defer VAT?

Lenders cannot defer VAT with HMRC

No bank, non-bank lender or broker can legally defer a customer’s VAT liability with HMRC. Commercial providers may help you apply to HMRC for a Time to Pay plan, but they cannot change statutory VAT deadlines themselves. That boundary is important to understand before signing any agreement.

What providers can do instead

Commercial finance providers can offer products that cover the cash shortfall caused by a VAT bill. These include short-term loans, business overdrafts, invoice finance, merchant cash advances and specialist VAT funding or tax loans. Borrowing does not erase the VAT liability — it converts the tax payment into a financed cost subject to interest and fees.

Common finance options to meet VAT bills

Short-term loans and commercial loans

Many lenders offer unsecured or secured short-term business loans specifically designed to pay urgent bills, including VAT. These loans are straightforward but may carry higher interest and fees for short durations. They can be useful when immediate payment is required and HMRC will not accept a delay.

Tax or VAT-specific financing

Some specialist lenders and brokers provide “tax loans” or “VAT financing” products that are expressly marketed to cover PAYE, VAT or corporation tax bills. These products often come with structured repayment terms and fees tailored to a tax payment timeline. Always compare the total cost against alternatives and consider how repayments will affect cash flow.

Invoice finance and cashflow solutions

Invoice finance (factoring or discounting) advances cash against unpaid invoices and can free up funds to pay VAT. Merchant cash advances and overdrafts are other short-term tools that can be used to meet tax obligations. For asset purchases, equipment finance can often include VAT in the financed amount, reducing upfront VAT exposure — see our equipment finance guide for details: Equipment finance.

Practical considerations and compliance

Costs, APR and total repayment

Financing VAT changes a tax bill into a borrowing cost; you will pay interest and possibly arrangement or exit fees. Compare APR or total cost of credit across lenders and factor these into the business case. Remember that a low headline rate can hide fees or restrictive terms, so read the contract carefully.

Security and eligibility

Some VAT financing requires security such as business assets or personal guarantees, depending on the lender and credit profile. Eligibility depends on trading history, turnover, sector risk and director credit records. Brokers and our AI matching system can help identify options that fit your business profile without costing you time contacting multiple providers.

Compliance and fair advertising

Best Business Loans does not provide regulated lending or tax advice and is not authorised by the FCA to approve regulated financial promotions. We act as an introducer, connecting you with lenders and brokers who may be authorised and able to help. Always verify a lender’s regulatory status, request cost illustrations, and consider independent advice where appropriate.

How to decide and next steps

Step-by-step approach

First, contact HMRC to explore Time to Pay options if you cannot meet a VAT deadline. Second, assess finance options only if HMRC declines or a faster solution is needed. Third, compare lenders on total cost, security, term, and repayment schedule before proceeding.

Questions to ask a provider or broker

Ask about total cost of borrowing, any arrangement or exit fees, whether VAT can be included in equipment finance, and whether security or guarantees are required. Request a written example of repayments and an annualised rate. Also ask how quickly funds can be released to meet your HMRC deadline.

How Best Business Loans can help

We match UK businesses with lenders and brokers who specialise in meeting tax and cashflow needs. We do not lend, charge for Quick Quotes, or sell your data to unrelated parties. Submit a Quick Quote to get an instant decision in principle and be connected with providers who may be able to help your situation.

Key takeaways

HMRC is the only body that can formally defer VAT; commercial lenders cannot defer your VAT with HMRC.
VAT can be financed through loans, invoice finance, merchant advances or by including VAT in equipment finance.
Financing VAT converts a tax bill into a borrowing cost; compare total cost, security and terms carefully.
Always speak to HMRC first and verify lender regulatory status; use brokers or introducers like Best Business Loans to speed up the search.

Ready to explore funding options?

If you need help finding a lender or broker to finance a VAT bill or to discuss equipment finance that can include VAT, submit a Quick Quote today. Our AI-driven matching can connect you to relevant providers quickly and without obligation.