BESPOKE BRIDGING LOAN

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VAT

BRIDGING LOANS

KNOWLEDGE BASE

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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