Do you support VAT-deferral or VAT-only loans on equipment purchases?

Short answer

Yes — while Best Business Loans is not a lender and does not provide finance directly, our platform can connect you with UK lenders and brokers that offer VAT-deferral and VAT-only options on equipment purchases. These options can help VAT-registered businesses spread or separately finance the VAT element, easing cash flow at the point of purchase. Submit a Quick Quote and request “VAT-deferral” or “VAT-only” in your notes so we can match you accordingly.

What this means in practice

Many asset finance providers structure hire purchase or lease facilities to delay the VAT outlay until your next VAT return or finance the VAT as a separate short-term facility. In both cases, the goal is to avoid paying the full VAT amount upfront when acquiring equipment, machinery, or vehicles. Providers differ in terms, fees, and availability, so a tailored match is important.

Who is this suitable for?

These facilities are typically designed for established, VAT-registered UK businesses purchasing VAT-qualifying assets. Common users include manufacturers, construction firms, logistics operators, healthcare providers, and agricultural businesses. Start-ups, non-VAT-registered entities, or businesses acquiring non-qualifying assets may not be eligible.

How Best Business Loans helps

Our AI-led process reviews your business profile and finance purpose to identify brokers and lenders that actively support VAT-deferral or VAT-only lending. We introduce you so you can compare options and proceed if suitable. There’s no obligation to accept any offer.

Important note

All finance is subject to status, affordability, and provider criteria. Terms vary by lender and your circumstances, and fees or interest may apply to VAT facilities. We do not provide advice; providers will share key information and risks before you make a decision.

What are VAT-deferral and VAT-only facilities?

Both options are designed to manage the VAT component on an equipment purchase, but they work differently. Understanding the mechanics helps you choose the right approach for your cash flow and accounting. Below is a clear breakdown of each method.

VAT-deferral explained

VAT-deferral typically means the VAT due on a hire purchase (HP) or finance agreement is delayed for an agreed period. The deferral period often aligns with your next VAT return cycle, such as 3 months or a similar timeframe. You pay the VAT after the deferral, while your asset finance repayments on the net cost begin as normal or after an agreed initial period.

Typical deferral periods

• 30–90 days deferral to align with your VAT quarter.
• Some providers may allow longer by exception, subject to status.
• Interest or a fee may apply for deferring VAT, depending on the lender.

VAT-only loan explained

A VAT-only loan is a separate, short-term facility that funds just the VAT amount at purchase. The VAT-only loan is usually repaid once your VAT reclaim is received, or over a short schedule if preferred. This can be used alongside HP or other asset finance on the net cost of the equipment.

How it sits alongside asset finance

• Loan A: Asset finance for the net cost of the equipment.
• Loan B: VAT-only facility to cover the VAT element upfront.
• Loans are distinct, with separate documentation and costs.

Key differences at a glance

• VAT-deferral: You postpone paying VAT for a set period; VAT-only loan: You finance VAT separately.
• Cash flow: Both ease upfront outlay; VAT-only loans may provide more flexibility on repayment timing.
• Costs: Fees and interest structures differ; compare APRs, fees, and settlement options.

Which option is better?

That depends on your VAT cycle, cash flow, and provider availability. Some lenders prefer deferral baked into HP; others offer a standalone VAT-only facility. Our role is to introduce you to providers that support your preferred approach so you can compare.

When to use these options and sector examples

VAT on capital equipment can be substantial, often 20% of the purchase price. For many SMEs, paying this upfront strains working capital, especially during growth or seasonal trading. Deferral or VAT-only finance can bridge the gap until your VAT reclaim.

Benefits for cash flow

• Preserves working capital for payroll, materials, and energy costs.
• Allows investment in productive assets without a large initial tax outlay.
• Can align outgoings with VAT return timing to minimise cash timing differences.

Illustrative example

Purchase price: £120,000 + £24,000 VAT (total £144,000). The asset finance covers £120,000, while a VAT-only facility covers £24,000. After the VAT reclaim is received, the VAT-only loan is repaid, reducing the period your cash is tied up.

Who commonly uses these options?

• Manufacturing and engineering upgrading CNC machinery or automation.
• Construction firms purchasing plant, powered access, or site equipment.
• Logistics operators investing in HGVs, trailers, or warehouse systems.
• Healthcare and care businesses acquiring clinical or catering equipment.
• Agriculture and farming purchasing tractors, combines, and implements.

If you operate in farming and land-based industries, see how we support agriculture business loans through relevant lenders and brokers who understand sector seasonality.

When it may not be suitable

• Non-VAT-registered businesses (no VAT reclaim to offset the timing).
• Assets that are not VAT-qualifying or complex tax scenarios.
• Where the additional facility cost outweighs the cash-flow benefit.

How to secure VAT-deferral or VAT-only via our matching process

We make it faster and simpler to reach providers who actively support VAT handling options on equipment finance. You stay in control of which route to take once offers and terms are presented.

Steps to request a VAT-deferral or VAT-only option

1. Complete the Quick Quote form and select Equipment Finance (or Asset Finance).
2. In the notes, state “Request VAT-deferral” or “VAT-only loan,” plus asset details and target timeline.
3. Our AI matches your profile with suitable lenders or brokers who support these features.
4. Review introductions, share documents once requested, and compare terms before you decide.

Eligibility and documents usually required

• Company details, trading history, and VAT registration status.
• Management accounts, filed accounts, and recent bank statements.
• Asset quotation or pro-forma invoice, including VAT breakdown.
• Director ID checks and any existing finance commitments.

Common provider criteria

• UK business with a clear commercial purpose for the asset.
• Asset located and used in the UK, with acceptable resale value.
• Affordability and creditworthiness assessed per provider policy.

Typical timeframes

• Indicative feedback: often 24–72 hours after initial information.
• Full credit decision: subject to document completeness and asset type.
• Payout: coordinated with supplier invoice and any VAT arrangements.

Start now and ask to be matched with providers offering VAT-deferral or VAT-only. It’s free to enquire and there’s no obligation to proceed. [Get Your Free Quick Quote Now]

Costs, risks, compliance, and FAQs

VAT-focused facilities are helpful, but they come with costs and considerations. It’s important to compare total cost of funds and how the timing aligns with your VAT reclaim. Responsible use is essential for healthy cash flow.

What does it cost?

• Interest: charged on the VAT-only loan or embedded in the deferral option.
• Fees: arrangement or documentation fees may apply.
• Early repayment: some providers allow early settlement once the VAT is reclaimed.

Risks and considerations

• Cash flow mismatch if your VAT reclaim is delayed or lower than expected.
• Additional facility cost vs. simply paying VAT upfront if reserves allow.
• Accounting treatment differences between HP, lease, and separate VAT loans.

Alternatives to consider

• Short-term working capital or revolving credit facilities.
• Invoice finance to accelerate cash inflows from B2B invoices.
• Negotiating staged payments with the supplier (where possible).

Frequently asked questions

Is a VAT-only facility the same as VAT-deferral?

No. VAT-deferral delays the VAT payment within the asset finance arrangement, while a VAT-only facility funds the VAT as a separate short-term loan. Both aim to reduce upfront cash strain at purchase.

Can I use VAT-only finance if I’m not VAT-registered?

Typically not, because the facility’s logic relies on reclaiming VAT from HMRC to repay the loan. Non-VAT-registered enterprises should explore alternative cash flow options.

Do all lenders offer these options?

No. Availability varies by provider, asset type, deal size, and your business profile. Our role is to introduce you to lenders or brokers who do support these structures.

Are the assets restricted?

Providers usually focus on tangible, VAT-qualifying business assets with a clear resale value. Asset eligibility and valuations are assessed during underwriting.

How quickly can I get a decision?

Some lenders issue indicative decisions within 24–72 hours of receiving core information. Timelines depend on deal complexity, documents, and asset specifics.

Key takeaways

• Yes — we can introduce you to providers that offer VAT-deferral or VAT-only facilities on equipment purchases.
• These options ease upfront VAT pressure and help align outgoings with VAT reclaim timings.
• Terms, fees, and eligibility vary, so comparing multiple providers is sensible.
• Ask for “VAT-deferral” or “VAT-only” in your Quick Quote to ensure accurate matching.

Ready to explore options with providers who understand your sector and cash flow? [Start Your Quick Quote →]

Important information and compliance

Best Business Loans is an independent introducer. We do not provide loans, credit broking, debt counselling, or financial advice; we introduce UK businesses to relevant lenders and brokers from our network. Any finance agreement will be provided by regulated firms where required, who will share key information, conduct affordability checks, and assess suitability.

All finance is subject to status, terms, and underwriting. Rates, fees, and eligibility depend on your circumstances, asset type, and provider criteria. This content is for information only and is intended for UK business customers; it is not a recommendation. Always seek professional tax advice regarding VAT treatment for your business.

We aim to ensure promotions are fair, clear, and not misleading, in line with FCA expectations, ASA guidance, and Google’s financial services policies. If you proceed, you will receive full documentation and disclosures from the chosen provider or broker.

Updated: October 2025