Surge in firms using loans to pay tax bills amid April increases
The number of businesses using loans in order to pay for tax bills has soared by more than a third so far this year in the face of April cost increases, a major financing firm has warned.
Billions of pounds of tax and VAT payments are set to be covered by credit and financing arrangements this year, according to specialist lender Premium Credit.
Bosses at the finance provider said it comes as small businesses across the UK face increased 'strain' on their finances due to the recent increase in employers' national insurance contributions.
In April, firms were hit by higher NI payments alongside the increases in the national minimum wage and tax increases, such as higher business rates payments and new packaging taxes.
Premium Credit said it witnessed a 37% jump in customers using its tax and VAT financing service in the first quarter of 2025 against the same period last year as firms prepared for tax hikes.
The number of customers using financing for tax and VAT has jumped by 109% over the past two years, the company added.
It added that the average loan used to help pay VAT tax bills was worth around £108,000 in 2024, with this around £70,000 for non-VAT bills.
Jennie Hill, chief commercial officer at Premium Credit, said: 'Around £3 billion to £5 billion of tax and VAT liabilities are financed each year and recent increases to employers' national insurance are adding to the strain on SME (small and medium-sized enterprise) cashflow.'
Meanwhile, research commissioned by the business surveying small business owners found that 20% of small firms said they worry that paying tax bills will be more difficult this year.
Around 28% also cautioned that they think they will struggle to pay a tax bill in the next five years.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
BBC News
44 minutes ago
- BBC News
Blackfriars Bridge undercroft could be skatepark or energy hub
A former rifle range and undercroft by Blackfriars Bridge could find a new use as a skatepark or energy site has been occupied since 2017 by Bazalgette Tunnel Ltd for the construction of the Thames Tideway will now return to either the City of London Corporation or Transport for London once it is determined which of the two bodies is the legal Water will manage the foreshore, which will include a café. The shooting range was shut down to allow for the construction of the tunnel and sits beneath the undercroft.A report by the corporation noted the undercroft was "historically associated with antisocial behaviour" and has been inaccessible, with hoardings around it for proposals have been put forward for the redevelopment of the site:A dedicated space for skateboarding and wheeled sportsAn energy centre delivering low-carbon heat Commercial options, such as kiosks and food and drink outletsA corporation spokesperson said the site was still being used to store materials related to the Tideway Tunnel.A further report detailing costs for each of the reuse options is to be presented to the City of London Corporation committee in early 2026.
The Guardian
an hour ago
- The Guardian
Sheffield Wednesday reach point of no return under Chansiri's ownership
Sheffield Wednesday have been testing the patience of the EFL and their fans since the controversial sale of Hillsborough to the owner, Dejphon Chansiri, seven years ago, but even so the escalation of the club's crisis from alarming to existential has happened at some speed. After years of somehow coping with transfer embargoes, points deductions, missed tax bills and the late payment of players, Chansiri's turbulent ownership appears to be reaching the point of no return. Wednesday were last week banned by the EFL from spending money on transfers until January 2027 for exceeding '30 days of late payments' to players in the previous 12 months and, the league clarified on Friday, for another missed payment to HMRC. The club, who have appealed against that penalty, will be in danger of having no players if they fail to pay June's wages on Monday's due date. Under Fifa regulations players would be entitled to give notice of their intent to terminate their contracts. The regulations state: 'In the case of a club unlawfully failing to pay a player at least two monthly salaries on their due dates, the player will be deemed to have a just cause to terminate his contract, provided that he has put the debtor club in default in writing and has granted a deadline of at least 15 days for the debtor club to fully comply with its financial obligation(s). Alternative provisions in contracts existing at the time of this provision coming into force may be considered.' Wednesday are understood to have belatedly paid some players last month's wages – payments for March were also late – but not all of Danny Röhl's squad have received their salaries. A club source said May's salary payments had been targeted, with Chansiri making sure the younger players and those under contract were paid in order to protect their resale value, whereas older squad members approaching the end of their contracts were not. The captain, Barry Bannan, the striker Callum Paterson and the defender Akin Famewo are out of contract next week after rejecting new deals offered last month, and it is unclear whether they have been paid. After contemplating a no-show Bannan is understood to have reported for duty as instructed on the first day of pre-season training on Thursday, but Paterson and Famewo did not turn up. All of Röhl's coaching staff are also out of contract next week and the manager, despite having two years on a contract that includes a seven-figure release clause, is expected to depart sooner rather than later. The German was interviewed by Southampton before they appointed Will Still last month, and is admired by Leicester, who have parted company with Ruud van Nistelrooy. Röhl may choose to leave Hillsborough even without a job to go to. Wednesday do not have pre-season fixtures arranged beyond an under-21s game against Frickley Athletic, and planned renovations to their training ground, including the installation of two new pitches, have not been completed. Hillsborough is in need of a major overhaul, with the infrastructure of the 126-year-old ground so poor that the boiler was unable to generate sufficient hot water for the players to shower in comfort at various points last season. Chansiri is believed to have acknowledged the gravity of the situation, and is willing to engage in serious talks regarding a sale. For years his family have funded multimillion-pound losses at Wednesday from the profits of their seafood business, Thai Union Group – total losses over his 10-year stewardship are more than £150m – but no longer appear willing to subsidise the club. TUG remains the world's biggest suppliers of canned tuna but its stock value has halved over the past decade, with the value of Chansiri's stake dropping from £18m to £9m. The family's overall stake is worth about 20 times that amount. Wednesday are attracting potential buyers, with two US consortiums understood to be particularly interested, but none have got anywhere near what they regard as Chansiri's outlandish valuation. Towards the end of last year the 57-year-old was telling brokers that Wednesday were worth twice as much as Sheffield United, who were being bought for £111m, and although his asking price has dropped it remains far too high for the would-be buyers. Sign up to Football Daily Kick off your evenings with the Guardian's take on the world of football after newsletter promotion An independent analyst who has studied Wednesday's accounts said an enterprise value of about £40m was realistic given the club do not own Hillsborough, and that the amount could be doubled if the ground were part of a deal. The stadium is owned by a company called Sheffield 3 Limited, which is controlled by Chansiri. Wednesday's attempt to include the £60m stadium sale in their 2017-18 accounts for the purpose of profitability and sustainability regulations, even though it did not take place until the following season, led to their being docked six points by the EFL (reduced from 12 on appeal). Chansiri is conducting sale negotiations, often from Bangkok. Wednesday are woefully understaffed at management level, with no chief executive or sporting director, leaving the club secretary, Lindsey Hinton, to put out the fires locally. Chansiri issued a rare public statement on Thursday, saying a potential sale with an American group had collapsed after the buyer failed to pay a £5m deposit, but it will have done little to reassure supporters. 'I take full responsibility for being unable to fulfil my current obligations,' Chansiri said. 'But a further obligation I have is to ensure that if the club is sold, it is sold to the right people with the right credentials, who can sustain Sheffield Wednesday and take the club forward.'
Telegraph
an hour ago
- Telegraph
How Trump's ‘revenge tax' brought the world to its knees
When Donald Trump unveiled his 'One Big Beautiful Bill' last month, all the focus was on how the president's trillions of tax cuts might blow out America's budget bottom line. But hidden within the bill's 1,000-plus pages was a clause that set alarm bells ringing in boardrooms at many of Britain's biggest companies. In section 899 of the bill, Trump proposed what has become known as a 'revenge tax', which gave him a new power to punish countries that had tax regimes he didn't like. If Britain's taxes displeased him – and they do – he could ratchet up US taxes on British companies' American operations to blood-curdling levels. Every year, British companies would face an extra 5pc tax hit on earnings from their US operations, with the rate maxing out at 50pc. The threat was a devastating one. British companies with big US exposure include the food giant Compass, the big pharma pair GSK and AstraZeneca, Barclays, British American Tobacco, drinks conglomerate Diageo, goods manufacturer Reckitt Benckiser and Intercontinental Hotels Group. All are listed on the London Stock Exchange, meaning Trump's threat could have been devastating for the already beleaguered index. The response was immediate. Business leaders and lobby groups quickly began knocking on Rachel Reeves's door, sounding the alarm and urging the Chancellor to get on the case with Scott Bessent, the US treasury secretary. Reeves got the message. She raised the S899 tax threat with Bessent when he came to London for trade talks with the Chinese in early June. By then, though, the bill was breezing through the House of Representatives and into the Senate, with the only change being a tweak to ensure investors in US Treasury bonds weren't affected by the 'revenge tax'. Businesses began weighing up Plan B. All the options for coping with the revenge tax were expensive and disruptive, ranging from pulling money out of the US to beat the higher rate to scaling back US investments, or dual-listing their stock in New York. Some even considered the nuclear option of spinning off their American businesses altogether. Fearing Trump's wrath The public debate on S899 hasn't matched the anxiety behind closed doors. Companies were reluctant to speak out, fearing Trump's wrath. But the clock was ticking. Trump wants his Big Beautiful Bill to become law by July 4. With less than a week to go, there was still no public sign that his team, or the Republicans in Congress, were ready to compromise. On Thursday night, though, the tax bloodbath was averted. Bessent announced that he'd extracted surrender terms from the finance ministers of the G7 – Britain, France, Germany, Italy, Japan and Canada – and told Congress to drop section 899. 'It's a big relief,' says Emanuel Adam, a Washington-based executive director at the lobby group British American Business. CS Venkatakrishnan, the Barclays chief, called it 'welcome progress, and a significant outcome for a great many UK companies like Barclays that invest in the US'. But a deal with Trump always comes at a price. The main target of s899 was efforts to impose a global minimum corporation tax, part of a OECD-led initiative, and in particular the Under-Taxed Profits Rule (UTPR). This aims to ensure that multinational companies always pay a tax rate of at least 15pc on their earnings, rather than being able to shelter profits in lower-tax countries. Bessent says the G7 will now not impose that levy on US businesses. The risk now, observers say, is that an American exemption to the UTPR could start to unravel that whole process, sending the world back into the rabbit warren of widespread tax avoidance. 'The biggest success has been to get a load of low-tax or no-tax countries, like the Gulf states and most of the island tax havens, to up their company tax rate to 15pc,' says Tim Sarson, the head of tax policy at KPMG UK. 'If they think they can reduce that rate and attract US companies to their jurisdiction, that might start to unpick the new system more widely.' Digital services taxes, which were one of Trump's explicit targets of s899, are still on the table. The president sees these as unfair imposts on American tech giants, but The Telegraph understands these will be fought over as part of his trade negotiations with individual countries, rather than as part of this deal. Closer to home, there's the question of whether the s899 deal will deliver yet another blow to Reeves's already shattered Budget. The Office for Budget Responsibility has estimated that the OECD 'Pillar Two' deal, which includes the global minimum tax rate and the UTPR, would deliver £1.3bn of extra revenue this financial year and next, climbing to £1.5bn by 2029-30. Most of this, though, would come from a different part of Pillar Two, which targets UK companies with subsidiaries in offshore tax havens, rather than US businesses. Tax experts say revenue from the UTPR, which the UK would collect from foreign companies, would be difficult to model and likely have only a small impact on the OBR's forecast. Price worth paying Even if there is a hit to Britain's tax take, it may have been a price worth paying to shield Britain's corporate A-list from Trump's brutal tax. With many blue chip companies reporting their annual or half-yearly results next month, boards were preparing and planning for the inevitable questions from alarmed shareholders. Many were evaluating what could be done to minimise the impact in the short term, in the hope that the political weather in the US might change after the Congressional midterm elections next year and the presidential election in 2028. 'I don't think companies would have retracted their investments or stalled major plans, but it would create additional friction. Projects might have taken longer,' British American Business's Adam says. 'Companies are agile, and companies know how to adjust. But this would have consumed resources and money that could be spent on other things.' Damage to confidence Although the immediate crisis seems to have passed, the Trump administration may have inflicted some lingering damage on the confidence that UK companies and investors have in the US as a place to do business. It just doesn't look quite like the safe, secure and stable proposition it used to be. Joe Dabrowski, of the Pensions and Lifetime Savings Association, says that when you add the s899 scare to the tariff threats, Trump's fight with Jerome Powell, the Federal Reserve chairman, and his radical surgery on corporate governance, the sum total is much greater uncertainty. 'It all creates an environment where investors just have to tread more carefully. There is a lot more thinking and due diligence and risk you have to factor in,' he says. 'Some of it might just be white noise and political posturing, but at times it's very difficult to tell the difference between that and reality.' And although Reeves probably had little choice but to yield to Trump, the G7's readiness to give way has probably only increased that risk. 'There's the fear, which I'm sure UK Treasury has as well, that if you give the Americans this, then the next time they're unhappy about something, they'll try the same trick,' says KPMG's Sarson. With the mercurial Trump barely started on his four-year term, British businesses should probably just put those contingency plans in a drawer, rather than feed them to the shredder.
