Corporation Tax bridging finance
Profitable trading, cash stretched at Corporation Tax due-date is a common UK limited company situation. The classic example: long debtor days, year-end stock investment, or capital purchase has consumed cash while the accounting profit (and therefore the CT bill) is real. A bridge facility pays HMRC on the due date and is repaid as cash catches up.
When a CT bridge makes more sense than TTP
- You expect to refinance the business, raise equity, or exit within 18 months. A clean HMRC compliance record matters to incoming lenders and acquirers.
- The cashflow shortfall is timing-driven (a known receipt or asset disposal will land in 3 to 9 months), not a structural decline.
- The total cost of the bridge (interest plus arrangement fee) is lower than the equivalent HMRC late-payment interest plus the reputational cost of TTP on file.
- You want to avoid HMRC repeatedly reviewing your file (the TTP renewal cycle).
When TTP is the better answer
- The amount is small (under £10k) and the broker fee on a bridge makes it uneconomic.
- The cashflow recovery is uncertain or longer than 12 months.
- You have no objection to TTP on your HMRC record and no upcoming refinance event.
FAQs
What is a Corporation Tax bridge?
A short-term loan (3 to 12 months) used to pay a Corporation Tax bill on the due date when cashflow is temporarily tight. Common for profitable but cash-stretched limited companies where the accounting profit is real but the corresponding cash has not yet landed (long debtor days, stock investment, capital purchase).
How does this compare to HMRC Time To Pay (TTP)?
TTP is an arrangement with HMRC directly: 6 to 12 months, interest at the HMRC late-payment rate (currently 7.5% over Bank of England base), no broker fee, shows on your HMRC compliance record. A Corporation Tax bridge keeps you in good standing with HMRC, often at a comparable or lower rate, but adds a lender to your stack. For companies expecting to refinance or sell within 18 months, keeping the HMRC record clean matters.
What rate should I expect?
Unsecured bridge for an established limited company: 0.8% to 2.0% per month, depending on the lender, ticket size and trading position. Secured against assets or a residential property: 0.5% to 1.0% per month. Compared to HMRC late-payment interest at ~12% APR, the bridge is competitive once you factor in record-keeping and stakeholder optics.
How quickly can a CT bridge be arranged?
Decision in 24 to 72 hours, drawdown in 5 to 10 working days for unsecured. Secured against property is slower (3 to 6 weeks) because of legal and valuation work. If the deadline is inside 14 days, unsecured is usually the only realistic option.
How do I repay the bridge?
Monthly interest payments through the term, balloon repayment at month 6, 9 or 12 from cashflow, refinance proceeds, or the next Corporation Tax return. Some lenders structure as equal monthly instalments instead.
Will the lender pay HMRC direct?
Most specialist CT bridge lenders fund into your business account on drawdown; you settle HMRC yourself with the cleared funds, usually same or next working day. A few lenders will pay HMRC direct on request to keep timing clean.
To get matched to CT bridging specialists: eligibility checker. Limited companies, LLPs and partnerships of 4+ only.
If the CT bill includes an S455 charge on an overdrawn director's loan, run the S455 director's loan bridge calculator first: clearing the balance before the 9-month deadline can remove that part of the bill entirely.