Bridging finance for VAT bills

Keep property deals moving when VAT comes due

Navigating a large VAT bill is rarely about the headline percentage. It is about timing. Commercial property purchases trigger a 20% VAT charge that can stall an otherwise well-structured deal. If you are acquiring a £1 million asset, that is £200,000 payable upfront before HMRC later refunds it. For many investors and developers, diverting that amount from working capital risks payroll, suppliers, and pipeline projects. Bridging finance exists to bridge that gap, funding the VAT so your transaction completes on time while you wait for the refund.

VAT bridging is short-term, pragmatic, and designed around the HMRC reclaim cycle. Lenders typically fund within days and are repaid when your VAT reclaim lands, usually 30 to 90 days later. The result is straightforward: you complete as planned, protect liquidity, and avoid avoidable costs.

There is also a broader use case. VAT loans can support wider tax liabilities such as Corporation Tax, Capital Gains Tax, Inheritance Tax, and PAYE. When a deadline looms, speed matters. The right facility can be arranged quickly with a clear exit strategy, often linked to a refund, disposal, or refinance.

Bridging structured correctly can cost less than letting HMRC penalties accrue.

As a UK-based broker, Kandoo helps you compare lenders, structures, and terms so that you only pay for the speed and flexibility you actually need. We translate the details into clear choices, from unsecured VAT loans that avoid charges on your property to specialist providers that fund high-value transactions in as little as 48 hours.

Who gains the most from VAT bridging?

If you are VAT-registered and buying a VAT-chargeable commercial property, bridging can fund the 20% VAT due at completion and be repaid once HMRC sends the reclaim. That means investors progressing an acquisition, developers completing a site, or businesses relocating premises do not have to pause for cash flow. It also suits SMEs facing urgent VAT or other UK tax deadlines where a quick injection of funds prevents penalties and interest while you organise a longer-term solution.

For buyers conscious about security, unsecured VAT facilities are available, allowing you to fund 100% of the VAT without a charge over the property. For larger or time-critical deals, specialist lenders can deploy substantial sums rapidly, keeping tight timelines intact. The common thread is speed, clarity on the exit, and minimal disruption to operations.

Your funding routes at a glance

1. VAT bridging for property VAT - short-term loan to cover the 20% VAT at completion, repaid from the HMRC refund.

2. Unsecured VAT loans - fund 100% of VAT without a property charge, protecting existing mortgages.

3. Standard bridging against property - broader short-term facility for VAT and other tax bills.

4. HMRC Time to Pay - 6 to 12 month instalments for VAT and other taxes if agreed.

5. Specialist fast-track lenders - for high-value deals, funding arranged within 48 hours.

6. Lender marketplace options - providers offering £10k to multi-million limits, with varied APRs and terms.

7. Business overdraft or revolving facility - flexible, but limits and pricing vary by bank.

Quick setup helps avoid penalties, delays, and missed completions.

What it costs, how it impacts, and where it saves

Who qualifies and what lenders look for

Eligibility is straightforward. VAT bridging for property is generally available to VAT-registered businesses buying a VAT-chargeable commercial property. Lenders want clear evidence of the transaction, a sound exit via the HMRC VAT reclaim, and standard due diligence on the buyer. Expect to provide the purchase contract, VAT invoice or statement, proof of VAT registration, and identity documentation. For other tax liabilities, lenders assess the liability, payment deadline, and your proposed exit, which might be a refinance, asset sale, or scheduled receivables.

Security varies by product. Some lenders offer unsecured VAT loans that fund the VAT without taking a charge over the property, which can be useful when you want to ring-fence existing mortgages or maintain flexibility for later refinancing. High-value facilities can be deployed quickly where the documentation is clean and the exit is credible. Kandoo can help present your case to the right lender, compare pricing, and streamline documents so timing aligns with completion.

From enquiry to funds - the practical steps

1. Share VAT bill or property VAT details with broker.

2. Confirm exit strategy - HMRC refund or refinance.

3. Provide ID, VAT registration and transaction documents.

4. Lender issues terms subject to checks and valuation.

5. Legal work and any valuation instructed promptly.

6. Sign facility documents and satisfy conditions precedent.

7. Funds released to meet VAT or tax deadline.

8. Repay on refund, refinance or scheduled exit.

Weighing it up quickly

Read this before you press go

Short-term finance is powerful when used precisely. Compare the cost of a bridging facility with the penalties and interest you would otherwise incur, including the risk of missing a completion date. Pay attention to fees, daily interest, minimum terms, and what happens if the HMRC refund takes longer than expected. Clarify security - unsecured options avoid charges on your property, which may suit future refinancing plans. Ensure your exit is realistic, documented, and timed conservatively. Lastly, keep your accountant in the loop so VAT filings and reclaim timings match the funding schedule.

Alternative paths if timing is less urgent

1. HMRC Time to Pay arrangement for VAT over 6-12 months.

2. Refinance or extend existing facilities to release capital.

3. Equity injection from investors or directors.

4. Supplier payment plans to ease short-term pressure.

5. Invoice finance to accelerate receivables into cash.

6. Asset refinance to unlock value from equipment or vehicles.

Frequently asked questions

Q: How quickly can VAT bridging funds be arranged? A: Many cases complete within 7-10 days, and specialist providers can move faster for straightforward transactions, sometimes within 48 hours for high-value property deals.

Q: Is VAT bridging only for property purchases? A: No. While it is common for the 20% VAT on commercial property, bridging can also fund VAT, Corporation Tax, CGT, IHT and PAYE liabilities when deadlines are pressing.

Q: Could HMRC penalties really cost more than a loan? A: Yes. On larger VAT bills, six months of penalties and interest can exceed the cost of a short-term facility, particularly when a quick setup prevents delays.

Q: Do I need to secure the loan against the property? A: Not always. Unsecured VAT loans exist, funding 100% of the VAT without a property charge, which helps protect existing mortgages and assets.

Q: Who is eligible for property VAT bridging? A: Typically VAT-registered businesses buying VAT-chargeable commercial property with a clear exit via the HMRC reclaim. Lenders review the transaction details and your ability to repay.

Q: What rates and amounts are available in the market? A: UK providers serve from tens of thousands to multi-million amounts, with terms from a few months to three years depending on product, security, and credit profile.

How Kandoo helps you decide and secure funding

Kandoo is a UK-based retail finance broker. We compare VAT bridging and unsecured options across trusted UK lenders, match you to the right facility, and coordinate documents so funds arrive when you need them. Our aim is to protect your cash flow, minimise costs, and keep your property deal on track.

Next step: speak to Kandoo for tailored terms within 24 hours.

Important information

This guide is for information only and is not financial or tax advice. Finance is subject to status, affordability and lender criteria. HMRC policies can change. Consider independent advice from your accountant or adviser before committing.