Number of Financial Adviser clients struggling with tax bills rising

Accountants and financial advisers warn that clients are increasingly struggling to pay tax bills with Corporation Tax the biggest concern, new research* from Premium Credit, a leading provider of finance for businesses, shows.

The number estimating that at least 15% of clients found it difficult to pay tax bills (37%) has more than doubled from three years ago (16%).

Premium Credit’s research also found almost all (95%) accountants and financial advisers surveyed who advise on tax are seeing a rise in clients struggling to pay tax bills, with nearly half (45%) saying they are seeing an increase of between 10% and 14%.

Around half (50%) say the biggest increase is in clients struggling to pay Corporation Tax, with 26% saying the biggest increase is in relation to VAT bills and 24% pointing to income tax. That is a switch from last year’s research** which saw income tax as the biggest issue cited by 70% of those questioned.

The average value of tax bills that clients are struggling to pay is around £65,000, with the survey finding accountants and financial advisers split on the reasons why clients are struggling to pay bills.

Economic factors, including tax rises, wage inflation, supply costs and general cost of living pressures, were ranked as having the same influence as personal issues such as divorce and redundancy.

The research found accountants and financial advisers are seeing growing use of HMRC’s Time to Pay (TTP) scheme, which allows eligible businesses extra time to repay tax arrears, usually over a period of three to six months.

Currently, 62% of accountants and financial advisers say 5% or more of their clients use TTP compared with 25% citing its use in last year’s study. However, within three years, nearly seven out of 10 (69%) believe 5% or more of their clients will be using it.

Jennie Hill, Chief Commercial Officer, Specialist Finance, at Premium Credit said “Accountants and financial advisers are facing a growing issue with clients struggling to pay tax bills, which is likely to have a knock-on effect on the financial strength of these businesses and ultimately whether they can survive. Engaging early with clients facing tax problems and offering practical solutions such as spreading the cost into convenient monthly payments will obviously help them, but it would also help accountants and financial advisers to protect their own businesses.”

The table below shows how the percentage of clients that accountants and financial advisers estimate struggle with tax bills has increased over the past three years.

Percentage of clients struggling to pay tax bills	The percentage of accountants and financial advisers who estimate that this percentage of their clients are struggling to pay their tax bills now	The percentage of accountants and financial advisers who estimate this percentage of their clients struggled to pay their tax bills three years ago
None	Zero	Zero
Less than 5%	Zero	1%
5% to 9%	4%	47%
10% to 14%	59%	36%
15% to 19%	30%	15%
20% to 49%	7%	1%