The number of businesses using loans in order to pay for tax bills has soared by more than a third so far this year in the face of April cost increases, a major financing firm has warned.

Billions of pounds of tax and VAT payments are set to be covered by credit and financing arrangements this year, according to specialist lender Premium Credit.

Bosses at the finance provider said it comes as small businesses across the UK face increased “strain” on their finances due to the recent increase in employers’ national insurance contributions.

In April, firms were hit by higher NI payments alongside the increases in the national minimum wage and tax increases, such as higher business rates payments and new packaging taxes.

Premium Credit said it witnessed a 37% jump in customers using its tax and VAT financing service in the first quarter of 2025 against the same period last year as firms prepared for tax hikes.

The number of customers using financing for tax and VAT has jumped by 109% over the past two years, the company added.

It added that the average loan used to help pay VAT tax bills was worth around £108,000 in 2024, with this around £70,000 for non-VAT bills.

Jennie Hill, chief commercial officer at Premium Credit, said: “Around £3 billion to £5 billion of tax and VAT liabilities are financed each year and recent increases to employers’ national insurance are adding to the strain on SME (small and medium-sized enterprise) cashflow.”

Meanwhile, research commissioned by the business surveying small business owners found that 20% of small firms said they worry that paying tax bills will be more difficult this year.

Around 28% also cautioned that they think they will struggle to pay a tax bill in the next five years.