Partners’ Tax Loans
Every January.
Every July.
Partners and LLP members pay tax personally on their share of profit, whether or not they have drawn the cash. For many firms that means the same squeeze twice a year. Funding can spread each payment, and some lenders offer a facility that covers it year after year.
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Quick answer
How can partners fund their self-assessment tax bills?
Partners and LLP members are taxed on their share of profit, with payments due on 31 January and 31 July. Partners’ tax funding pays HMRC on time and spreads the cost over monthly instalments, either one payment at a time or through an annual facility. The borrowing can sit with the firm or the individual partner. We search the market for the right structure.
The pressure
Every January.
In a partnership or LLP, each partner is taxed on their share of the firm’s profit, not on what they actually drew. Balancing payments and payments on account fall on 31 January and 31 July, and many firms hold a tax reserve or pay partners’ tax on their behalf.
When profit is tied up in WIP and unpaid bills, that reserve competes with salaries, the PII renewal and VAT. A good year can make it harder: higher profit means a larger balancing payment and higher payments on account for the year that follows.
What can be funded
What it can cover.
“Simon was excellent throughout the process.”
- 01 The January payment The balancing payment and the first payment on account.
- 02 The July payment The second payment on account.
- 03 Tax paid by the firm for its partners Where the firm settles partners’ tax and treats it as drawings.
- 04 Extra tax from the basis period change Transition profits being taxed over several years.
How it’s often structured
Structured around the practice.
Funding can be arranged for a single payment and repaid over the following months, ideally before the next one falls due. Some lenders offer an annual facility instead, which can be drawn for each January and July payment and is reviewed each year against updated accounts.
Borrowing can sit with the firm, which then pays partners’ tax from its own account, or with individual partners. Borrowing by an individual can be regulated consumer credit, so we check which applies before you go ahead.
How we help
Not one lender. The right one.
Partners’ tax funding is offered by specialist professions lenders, tax funders and some banks, and terms vary widely. We look at how your firm handles partners’ tax and when its cash comes in, then search the market for the option that fits. For the firm’s own corporation tax and VAT, see tax and VAT funding.
Want a feel for the numbers first? Try our tax bill funding calculator.
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What lenders will want to see
What lenders will look at.
- The tax calculations or HMRC statements
- The firm’s recent accounts and management figures
- How partners’ tax is reserved and paid
- The partnership or LLP agreement
- Confirmation that returns and payments are up to date
Who this is for
- Law firm partnerships and LLPsPartners’ tax due while WIP is still unbilled.
- Accountancy practicesPartners’ tax at the busiest point of the year.
- GP partnershipsPartners’ tax on profit shares and seniority.
- Surveying practicesTax on a strong year, paid in a quieter one.
- Architecture practicesTax that lands between stage payments.
Questions
What firms usually ask.
Can a firm borrow to pay its partners’ tax?
Often, yes. Many partnerships and LLPs pay partners’ tax from the firm’s account and treat it as drawings, and lenders will fund that. Where partners pay their own tax, funding can be arranged for individuals instead, which may be regulated consumer credit.
Is there a facility that covers every January and July?
Some lenders offer an annual facility that can be drawn for each tax payment and repaid before the next. It is reviewed each year, usually against updated accounts. We’ll tell you whether that or single-payment funding suits your firm better.
What if a partner is already behind with tax?
Funding is designed for current and upcoming bills. If a payment is already overdue, speak to HMRC about a Time to Pay arrangement and to your accountant, and tell us at the outset.
Knowledge Hub
Read the guides.
Let's talk
January or July coming up?
Talk to us before the payment is due.
Before you approach a lender, speak to someone who understands the transaction. Confidential, no-obligation initial discussion.
Finance of £25,000 or less for sole traders and small partnerships can be regulated consumer credit. We'll tell you at the outset if that applies to your firm.
