What we are seeing in lender appetite this quarter

Lender appetite in commercial tax-bill finance moves quarter to quarter, sometimes month to month. What follows is what we are seeing across the panel in Q1 2026. Names withheld pre-launch, but the patterns are real and worth knowing if you are sizing a facility in the next 90 days.

Three lenders have tightened

The most visible shift this quarter is at the smaller-ticket end of VAT and CT. Three of the lenders we route most volume through have tightened on businesses with under two years of filed accounts. Where a sub-24-month limited company would have been priced at 1.4% per month in November, the same case is now coming back at 1.7% or being declined outright. The reason given consistently: portfolio loss rates on first-time borrowers ticked up in late 2025, and underwriters are pricing or excluding accordingly.

If you are in the sub-24-month bracket, expect to either pay more, provide a personal guarantee on amounts you previously would not have, or spend longer in the underwriting process while the lender does deeper due diligence. None of these is a deal-breaker, but plan for the friction.

Two lenders have sharpened

The opposite movement is happening at the prime end. Two lenders with strong balance sheets are competing harder on quality VAT cases. Established limited companies, two or more years of clean filed accounts, no PAYE arrears history. We are seeing pricing as low as 0.95% per month plus 0.75% setup on £100k+ VAT bills with these lenders. That is the sharpest end of the market we have seen in 18 months.

The implication is that the spread between weak and strong cases is widening. A year ago the difference between best and worst pricing on a £75k VAT bill might have been 40 basis points per month; today it is closer to 80. Worth shopping carefully if your file is clean. There is real money in the spread.

One specialist has stepped back

On PAYE arrears specifically, one of the specialist lenders we routed most volume to has quietly closed its book to new business for the quarter. Not exiting the market, the messaging is, but rebalancing portfolio. The practical effect for brokers is that PAYE arrears cases above £80k now route to a smaller pool of underwriters, and pricing has firmed by roughly 25 basis points per month as a result.

If you have a PAYE arrears case in mind, the window for the most competitive pricing closed in February. Cases are still placeable, but expect 1.6–2.0% per month rather than the 1.3–1.7% range that was typical in Q4 2025.

R&D advance: stable, slow

R&D advance pricing has been remarkably stable through Q1. Most of the panel sitting at 1.2–1.5% per month against filed claims at 70–80% LTV. The slowdown is on HMRC processing time rather than lender appetite. Claims that historically paid out in 4–6 weeks are now 12–14 weeks, which is pushing more clients into the advance product than we have seen in three or four years. Lender appetite is good and underwriting is fast; the bottleneck is HMRC, not finance.

The take

Q1 2026 is a quarter where credit profile matters more than it did in 2025. Strong files are getting better pricing than they have in years; sub-prime files are paying more or going unfunded. Sector-specific specialists are still active but the panel has thinned at the edges. If you are sizing a facility in the next 60 days, getting a real quote rather than relying on last-quarter's pricing assumptions is worth the five minutes.