BESPOKE BRIDGING LOAN

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VAT

BRIDGING LOANS

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By   default,   commercial   property   is   exempt   from   VAT   but   it   is   not   as   simple   as   that.   Commercial   properties   less   than   three   years   old   are   set   at   the standard   rated   of   20%.   In   addition,   owners   of   commercial   property   can   elect   to   waive   the   exemption   from   VAT   and   choose   to   charge   VAT   on   a property.   This   is   known   as   the   “option   to   tax.”   Exercise   of   the   option   is   a   long-term   commitment   as   it   cannot   be   revoked   for   20   years   once   exercised and VAT is charged on the sale of an “opted-in” property. With   the   buyer   liable   to   pay   VAT   on   the   purchase   price   it   is   not   uncommon   for   purchases   of   this   nature   to   fall   through   because   an   individual   or company   simply   hasn’t   legislated   for   the   additional   significant   fee.   It   may   not   always   be   possible   to   finance   the   VAT   through   a   loan   that   is   being   used to buy the property and in these circumstances VAT bridging loans can be an exceptionally useful tool. A   VAT   bridging   loan   is   similar   to   a   standard   bridging   loan   with   lenders   having   to   work   to   the   same   tight   time   constraints   providing   solutions   to commercial   property   buyers   under   pressure   to   complete   a   purchase   transaction.   By   allowing   these   buyers   to   cover   a   large   extra   sum   of   money   at   the very end of the buying process they ensure the completion of the transaction. The   exact   way   these   loans   work   does   vary   slightly   from   lender   to   lender.   They   are   generally   available   from   sums   of   around   £30K   upwards   (ie.   the   VAT for   a   £150,000   property   purchase)   and   many   lenders   will   seek   security   in   the   form   of   a   second   charge   over   the   property   being   acquired,   particularly   if they are covering up to 100% of the VAT costs. In   many   cases,   the   VAT   paid   on   a   property   transaction   can   be   reclaimed   from   HMRC,   but   every   commercial   property   buyer   must   plan   for   a   delay   of   at least   45   to   120   days   between   payment   and   recovery   of   the   VAT.   The   process   of   reclaiming   these   monies   can   be   time   consuming   and   complicated   so some   lenders   offer   a   managed   solution   for   both   the   funding   and   recovery   of   VAT.   They   effectively   take   over   the   claim   and   manage   the   process   from start to finish. Property   investors   and   developers   operate   in   an   extremely   competitive   environment   and   being   able   to   minimise   the   impact   VAT   costs   have   on   their investments   is   vitally   important.   A   VAT   bridging   loan   can   resolve   a   pressing   short-term   need   and   if   the   subsequent   claim   is   also   handled   by   the   lender it will reduce pressure on the investor at what is undoubtedly a very busy time. Still unsure and need to explore your options? Why not consult an expert? Central   Bridging   are   bridging   loan   specialists   with   a   great   track   record.   We   are   a   principal   lender   offering   a   range   of   loan   facilities   for   business   use from £250K to £2.5M over periods from 3 to 24 months. Our loans are secured on freehold property across England and Wales. Crucially   you   will   always   speak   to   a   decision   maker   who   will   take   time   to   understand   you   and   your   situation   and   unlike   some   of   the   bigger   banks   will then tailor a solution that best suits your needs rather than their own. For a confidential discussion in the first instance contact us on:   Tel 03332 400 506   Email enquiry@centralbridging.co.uk Online
Central Bridging, Granary Wharf, Wharf Road, Burton on Trent, Staffordshire, DE14 1DU Tel: 03332 400 506   Email: enquiry@centralbridging.co.uk   Web: www.centralbridging.co.uk Central Bridging is a trading style of Central Bridging Loans Ltd. Registered in England & Wales | Company Registration Number 07728274. Central Bridging is not regulated by the Financial Conduct Authority (FCA). All loans arranged by Central Bridging are non regulated contracts as defined under The Financial Services and Markets (Regulated Activities) Order 2001 and the Financial Service and Markets Mortgage Credit Directive Order 2015. © Copyright Central Bridging Loans Limited Privacy Policy
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BESPOKE BRIDGING LOAN

& SHORT TERM LENDER

By   default,   commercial   property   is   exempt   from   VAT   but   it   is   not   as simple   as   that.   Commercial   properties   less   than   three   years   old   are set   at   the   standard   rated   of   20%.   In   addition,   owners   of   commercial property   can   elect   to   waive   the   exemption   from   VAT   and   choose   to charge    VAT    on    a    property.    This    is    known    as    the    “option    to    tax.” Exercise   of   the   option   is   a   long-term   commitment   as   it   cannot   be revoked   for   20   years   once   exercised   and   VAT   is   charged   on   the   sale   of an “opted-in” property. With    the    buyer    liable    to    pay    VAT    on    the    purchase    price    it    is    not uncommon   for   purchases   of   this   nature   to   fall   through   because   an individual    or    company    simply    hasn’t    legislated    for    the    additional significant    fee.    It    may    not    always    be    possible    to    finance    the    VAT through   a   loan   that   is   being   used   to   buy   the   property   and   in   these circumstances VAT bridging loans can be an exceptionally useful tool. A   VAT   bridging   loan   is   similar   to   a   standard   bridging   loan   with   lenders having   to   work   to   the   same   tight   time   constraints   providing   solutions to     commercial     property     buyers     under     pressure     to     complete     a purchase   transaction.   By   allowing   these   buyers   to   cover   a   large   extra sum   of   money   at   the   very   end   of   the   buying   process   they   ensure   the completion of the transaction. The    exact    way    these    loans    work    does    vary    slightly    from    lender    to lender.    They    are    generally    available    from    sums    of    around    £30K upwards   (ie.   the   VAT   for   a   £150,000   property   purchase)   and   many lenders   will   seek   security   in   the   form   of   a   second   charge   over   the property   being   acquired,   particularly   if   they   are   covering   up   to   100% of the VAT costs. In    many    cases,    the    VAT    paid    on    a    property    transaction    can    be reclaimed    from    HMRC,    but    every    commercial    property    buyer    must plan   for   a   delay   of   at   least   45   to   120   days   between   payment   and recovery   of   the   VAT.   The   process   of   reclaiming   these   monies   can   be time   consuming   and   complicated   so   some   lenders   offer   a   managed solution   for   both   the   funding   and   recovery   of   VAT.   They   effectively take over the claim and manage the process from start to finish. Property      investors      and      developers      operate      in      an      extremely competitive   environment   and   being   able   to   minimise   the   impact   VAT costs   have   on   their   investments   is   vitally   important.   A   VAT   bridging loan   can   resolve   a   pressing   short-term   need   and   if   the   subsequent claim   is   also   handled   by   the   lender   it   will   reduce   pressure   on   the investor at what is undoubtedly a very busy time. Still   unsure   and   need   to   explore   your   options?   Why   not   consult   an expert? Central   Bridging   are   bridging   loan   specialists   with   a   great   track   record. We    are    a    principal    lender    offering    a    range    of    loan    facilities    for business   use   from   £250K   to   £2.5M   over   periods   from   3   to   24   months. Our    loans    are    secured    on    freehold    property    across    England    and Wales. Crucially   you   will   always   speak   to   a   decision   maker   who   will   take   time to   understand   you   and   your   situation   and   unlike   some   of   the   bigger banks   will   then   tailor   a   solution   that   best   suits   your   needs   rather   than their own. For a confidential discussion in the first instance contact us on:   Tel 03332 400 506   Email enquiry@centralbridging.co.uk Online
Central Bridging, Granary Wharf, Wharf Road, Burton on Trent, Staffordshire, DE14 1DU Tel: 03332 400 506  Email: enquiry@centralbridging.co.uk Web: www.centralbridging.co.uk Central Bridging is a trading style of Central Bridging Loans Ltd. Registered in England & Wales | Company Registration Number 07728274. Central Bridging is not regulated by the Financial Conduct Authority (FCA). All loans arranged by Central Bridging are non regulated contracts as defined under The Financial Services and Markets (Regulated Activities) Order 2001 and the Financial Service and Markets Mortgage Credit Directive Order 2015. © Copyright Central Bridging Loans Limited Privacy Policy
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VAT

BRIDGING LOANS

KNOWLEDGE BASE

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