Let’s talk about tax: SMEs are struggling to pay their tax bills, with many taking financial risks or making significant cuts to meet their obligations. Which bills are proving most challenging and how can businesses manage working capital to ease this pressure?

SME tax bills and the risks they are taking in order to pay them

It comes as little surprise to learn that SMEs are finding it difficult to find the money to meet their tax demands. According to a new study from Premium Credit, 52% of these businesses are having problems with paying their taxes.

The greatest challenge is corporation tax, with over 20% experiencing difficulties with payment, while 12% are increasingly stuck with regard to paying VAT. A worrying level, at 20%, are struggling with both. Notably, almost 40% revealed that the amount of tax owed was over £50,000.

Another tax that is causing SMEs problems is business rates. Tellingly, further reform of the system is high on firms’ wish list for the 2026 Autumn Budget, despite the extensive reorganising that has taken place over the last 12 months. That the message from SMEs to the Chancellor is crystalising around “breathing space” tells its own story.

The pressure on SME finances is growing even stronger, highlighted by some of the steps that businesses are taking to pay their tax bills. These include loading up business credit cards and using unsecured loans as well as cutting staff and reducing recruitment. Then there is the growing risk of legal action if bills are unpaid, with recent evidence showing that councils are taking more businesses to court over outstanding business rates.

How alternative lenders can help SME meet their tax obligations

Paying tax bills in the wake of yet another round of rising energy, employment and costs and continued market difficulties is clearly proving increasingly difficult for SMEs. With access to finance critical to managing the impact on cashflow, ongoing caution from traditional banks with regard to small business lending is making the situation even more challenging.

This is where alternative lenders can help.

Alternative lending solutions, such as invoice finance, asset finance and peer-to-peer lending, have become funding lifelines. For example, asset finance is being commonly used means for buying vehicles, machinery or equipment, while invoice finance is being employed to manage staff costs and, more broadly, to cover costs while income catches up.

Overall, by offering a more accessible, cost-effective and personalised approach to lending, these alternative finance facilities are helping small businesses navigate the current climate and target greater stability and growth.

SME finance options for paying corporation tax and other tax bills

Essentially, the recent study from Premium Credit shows the continuation, or indeed worsening, of an ongoing problem. The relentless pressure on working capital from years of severe headwinds is becoming increasingly apparent, both in terms of the rising number of unpaid bills and what businesses are doing to make ends meet.

Nevertheless, cashflow has to be managed and tax bills have to be paid. As such, against the backdrop of continued caution from traditional lenders, it is important that key decision-makers are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.