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VAT Loans Explained

What is a VAT Loan?

Paying VAT bills every quarter is a legal obligation for organisations with a taxable turnover, but cashflow issues can be a common side effect of each quarterly payment.

Many choose to take the sting out of paying the bill by taking out a VAT loan. This ensures HMRC are paid in full and on time, but the financial impact to your organisation is spread over time, meaning you retain valuable cash, avoid late payment penalties, and establish a healthier cashflow. 

"It was great working with Bluestone to fund our VAT bill - they have been helpful and supportive to our requirements. The process has been easy and it's one less thing for the business to have to worry about."

Miranda Jules, Admin Director, G2 Studio

Contact our team today to apply for a VAT loan or to request more information.

VAT Loans explained with our Loans Specialist, James Lewis

VAT Loans

How do VAT loans work?

If your organisation is struggling with cashflow when VAT is due to be paid, or you would rather keep that cash in the bank where it fuel growth or cover unforeseen costs, you might choose to apply for a VAT loan.

The lender settles your VAT bill with HMRC, and you pay the lender back in instalments over an agreed period.

Repayments are subject to fixed interest rates (which will vary depending on the organisation’s circumstances) and typically made on a monthly basis over 3, 6, 9 or 12 months.

The amount a business can borrow will depend on the unique circumstances of the business and eligibility. In addition to credit checks and a review of the business’s financial situation, other eligibility criteria will usually apply, often including:

  • the business is VAT registered
  • turnover is more than £85,000 ex-VAT
  • UK organisation
  • usually a limited company, although partnerships and some sole traders may also qualify
  • trading for more than one year.
VAT loans discussion - Women actively explaining ideas and concepts while collaborating around a whiteboard.
VAT loans for engineering - A skilled mechanical engineer measuring a sheet of metal, illustrating the relevance of VAT loans in the industry.
Pros & Cons of VAT Loans

Why use a VAT Loan?

  • A VAT loan ensures that HMRC receive their payment in full and on time, helping your organisation to avoid late payment penalties.
  • A VAT loan can prevent you from parting with a large chunk of cash that could be put to better use, i.e., to be invested in growth. 
  • VAT loan repayments can be made on a monthly basis rather than making quarterly VAT payments which can help to maintain a healthy cashflow. 
  • VAT loans do not use existing banking or credit facilities and may be arranged as ‘rolling’ or drawdown borrowing (subject to eligibility). This allows the borrower to use loan funds on a fluctuating basis.
Considerations of VAT loans
  • VAT loans cannot be used to pay other tax liabilities such as corporation tax, although it is possible to obtain a loan to cover corporation tax bills.
  • Interest will be applied to a VAT loan, so while the payments will be spread over a longer period of time, your organisation will pay more overall.
  • If you fail to keep up repayments on your loan, your credit score and future finance applications could be impacted.


Apply for a VAT loan

How to apply for a VAT loan

At Bluestone, we understand that applying for a VAT loan can be a daunting process, but we're here to support you every step of the way.

Our team of finance experts have years of experience helping businesses like yours secure the funding they need to cover their VAT bills. We'll work closely with you to understand your specific requirements and provide you with a range of financing options tailored to your business needs.

You can start your VAT loan application today via the Bluestone Portal, orcontact us today for a no-obligation conversation about your financial requirements.

Alternatively, you can email our Commercial Loans Specialist directly at

Need to pay a VAT bill?

Spread the cost with a VAT loan with Bluestone.

VAT Loans

Frequently Asked Questions

Can you explain the concept of a VAT bill loan and how it differs from other types of financing options in the UK?

A VAT bill loan is a financing option that allows organisations in the UK to borrow against their outstanding VAT bills. This type of loan provides a source of working capital to help organisations manage the cash flow impact of paying large VAT bills.


How does a VAT bill loan benefit my organisation, and what advantages does it offer compared to other financing options?

A VAT bill loan benefits an organisation by providing quick and flexible access to working capital to help manage cash flow during periods of increased VAT payments. This type of loan can also help organisations avoid having to dip into their operating funds to pay VAT bills, preserving those funds for other important organisation needs.


Are there any specific requirements for organisation's to be eligible for a VAT bill loan in the UK, and how do I determine if my organisation qualifies?

To be eligible for a VAT bill loan in the UK, an organisation typically needs to be VAT registered and have a good credit history. The specific requirements may vary depending on the lender and the loan product being offered.


What is the typical repayment period for a VAT bill loan, and how does it impact my cash flow and financial statements?

The repayment period for a VAT bill loan will depend on the loan amount and the repayment schedule agreed upon with the lender. The loan can typically be structured to match the timing of the VAT payments, helping to minimise the impact on the organisation's cash flow.


Are there any fees or charges associated with VAT bill loans, and if so, can you provide an estimate of these costs?

There may be fees associated with a VAT bill loan, such as origination fees, documentation fees, and interest charges. These fees will vary depending on the lender and the loan product being offered. We would be happy to provide an estimate of the costs based on your specific needs and circumstances.

Our team are always here to help...

We know finance can be complex and often it's easier to talk things through. Drop us a message or give us a call 0330 135 8660 and we'll get back to you ASAP.

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