Being hit with a large tax bill may make you panic. Luckily, there are funding options you can use to pay off these bills.
In this blog, we take a look at whether you can get a loan to pay off taxes and what types of loans you could use…
Can I get a loan to pay off tax debt?
Yes, it is absolutely possible to get a loan to pay off tax debt. Many lenders are happy to let you borrow for this purpose, provided they are satisfied with your current financial position.
Therefore, so long as you are not struggling to meet lots of other financial commitments, you should be good to go.
Now let’s take a look at some options you can use…
Paying a tax bill with a secured loan
One funding solution you can use in this situation is secured finance.
With this option, you’ll need to have a property, as the loan will be secured against it. This is in case you fail to make your monthly repayments.
Securing a loan against a property can open up larger loan sizes and longer repayment terms, which can be useful if it is an unexpected big bill. However, it may not be appropriate to borrow over a long period to fund ongoing tax liabilities, especially when securing against your property, which could be at risk if you are unable to keep up with your monthly repayments.
Lenders are usually more flexible with their criteria compared to other types of finance. Therefore, it can be a good funding option to use in these circumstances.
Getting a personal loan to pay taxes
Another borrowing option you could use to pay your tax bill is personal loans or unsecured finance.
With this option, a property is not used as security, which means that the risk for lenders is greater. This could impact the amount, term or rate of the personal loan.
If the tax bill is substantial, or you wish to borrow over a longer period, you may need to consider an option that can offer you a larger loan size or longer term.
Before deciding on a solution it is always worth getting advice from a professional, as they will be able to outline the best options available to you.
Can I pay my tax bill with a credit card?
A lot of people pay their bills through credit cards. So, your first instinct when you have to pay your tax bill might be to use your credit card.
However, HMRC no longer accept personal credit cards. Now, only business or corporate credit cards are accepted and HMRC will apply a fee for doing this.
Therefore, if you need to pay this bill and you don’t have a business credit card, you may need an alternative option.
If, however, you do have a corporate credit card you can use this if you wish, however with the HMRC fee and potential credit card interest, this may not be the best option so it could be worth getting advice from a professional beforehand.
What happens if I don’t pay my tax bill?
If you fail to pay you will start being charged interest. This can quickly mount up over time, so it’s always worth trying to tackle these issues as soon as possible.
Speak with HMRC and make them aware of the issues. Avoiding them will only make it worse. By talking to them you may be able to get a payment plan in place to help you or get support in another way.
Regardless of how you choose to proceed, it’s important that you keep communication open with HMRC. This is the best way to prevent any proceedings or problems from occurring.
Summary
Paying off a tax bill can be achieved through a loan. So, it is always possible to prevent HMRC proceedings from developing. However, each finance option may have different criteria, terms and risks, so it is always a good idea to assess your options carefully before you decide. If you’re unsure it could be worth getting help from a professional.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
