The number of SMEs looking to spread the cost of tax bills has more than doubled over the past two years, Premium Credit has found.
The finance provider revealed that the number of customers using its tax and VAT funding service has increased by 108% over the past 24 months, while the total value of lending provided in 2024 was 52% higher compared to 2022.
Furthermore, Premium Credit found that in the first quarter of 2024, total lending increased by 37% year-on-year, while the number of customers increased by 22% in the same period.
Lending for VAT bills was 24% higher in 2024 compared to 2023, while Premium Credit’s lending for corporation tax and self-assessment tax payments increased by 29%.
In 2024, the average size of loan to help pay VAT tax bills was £108,000 and £70,000 for non-VAT tax bills.
In Q1 2025, by comparison, the average loan for VAT bills was £111,000, compared to £100,000 for other tax bills.
Chief commercial officer at Premium Credit, Jennie Hill, said: "Around £3bn to £5bn of tax and VAT liabilities are financed each year and recent increases to employers’ National Insurance are adding to the strain on SME cashflow.
"That helps explain the growth of flexible VAT, corporation tax and self-assessment solutions which enable businesses to spread the cost of annual and quarterly liabilities into convenient monthly payments for up to a year."
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