Why tax funding makes strategic sense for business cash flow
Greg Taylor · Posted on: February 12th 2026 · read
Each year, UK businesses access between £3bn and £5bn in tax‑related funding.
This has become a valuable tool for organisations of all sizes to support cash‑flow management, as even strong and profitable businesses can face temporary cash‑flow pressures - especially given the continually rising tax liabilities imposed by successive governments in recent years.
Within the Banking & Finance team at MHA, we’ve seen that as the overall tax burden on businesses has increased, owners and management teams continue to face a familiar challenge: Balancing statutory tax obligations while protecting the working capital needed to run and grow their organisations.
For many SMEs and mid‑corporate businesses, Corporation Tax, VAT, and Self‑Assessment payments often fall at moments that clash with growth initiatives, capital expenditure, or seasonal trading demands.
Why management teams use tax funding
A Tax Funding Facility is designed to ease the cash‑flow strain caused by large, one‑off tax payments. Instead of making a single payment that tightens liquidity, businesses can spread the cost into predictable monthly instalments - typically over three to twelve months. This frees up cash within the business to support growth initiatives, such as placing deposits on vehicles, plant, or machinery, or investing in new projects. In turn, this helps strengthen both top‑and bottom‑line performance while ensuring HMRC is still paid on time.
This approach enables management teams and business owners to plan with confidence, knowing their tax commitments are under control without compromising operational or strategic priorities.
The value of tax funding goes beyond convenience; it supports better decision-making and greater financial resilience.
Key benefits include:
- Improved cash flow control Large tax payments are smoothed into manageable monthly instalments, reducing sudden pressure on cash - even where reserves exist. These facilities also avoid over leveraging because they fund only the liability due up to the next tax cycle, operating much like a rolling overdraft style facility.
- Greater budgeting certainty Fixed repayments provide accuracy and stability in cash flow forecasting, helping businesses plan with confidence.
- Operational and strategic flexibility Preserved liquidity can be redirected towards recruitment, investment, or seizing market opportunities, rather than tying up capital in a single HMRC payment.
- Efficient and straightforward setup Tax Funding Facilities are typically unsecured, quick to arrange, and structured so they do not interfere with existing banking arrangements. Banks and other lenders generally prefer clients to use a tax funding facility rather than enter into an HMRC Time to Pay (TTP) arrangement, as it demonstrates forward planning and good financial governance.
A strategic part of your wider funding plan
Tax funding is most effective when it forms part of a broader working‑capital or business‑finance strategy. At MHA, our Banking & Finance Team specialises in working closely with management teams to ensure facilities are structured in a way that aligns with wider business objectives - whether that involves supporting growth, navigating an MBO, MBI, or acquisition strategy, or maintaining headroom across existing facilities.
By leveraging strong relationships with our extensive panel of banks and specialist lenders, we help clients secure competitive terms that suit their unique circumstances. We then manage a smooth, end‑to‑end process, allowing finance teams to remain focused on running the business.
Plan ahead and stay in control
Tax Funding Facilities are now a mainstream financing tool and should be part of any business’s wider working‑capital or finance strategy. These ‘revolving‑credit’ style facilities provide flexibility, increased liquidity, and greater budgeting certainty at a time when many businesses are operating in unpredictable economic conditions.
Taking a proactive approach to managing tax payments helps keep your business agile and financially flexible, ensuring you can respond to market conditions and seize growth opportunities as they arise.
Speak to our Banking & Finance team today to explore how a Tax Funding Facility could support your business.
