For brokers

How Broker Commission Works on VAT Bridging

PropertyVAT Team · Updated 21 October 2026 · 2 min read

VAT facilities are smaller and shorter than the senior debt they sit beside, so the procuration fee is smaller too. Judged purely on fee per case, they look marginal.

Judged on what they protect, they are among the better uses of a broker's time.

How it typically works

Commission on a VAT facility is usually a procuration fee expressed as a percentage of the facility amount and paid on completion.

The facility covers the VAT, not the purchase price. On a £1.5m purchase with an opted seller, the VAT facility is £300,000 — a fifth of the senior loan size. The fee scales accordingly.

Specific rates vary by lender and by volume, so confirm terms directly rather than assuming a market standard.

Where the real value sits

Three places, and the fee is the smallest of them.

It protects the completion. A client who cannot find 20% on the day does not complete. If the deal fails, the senior procuration fee fails with it. The VAT facility is often what converts a case that would have collapsed into one that pays.

It differentiates you. Most brokers raise VAT when it becomes a problem. Raising it in the first conversation — has the seller opted to tax, is the entity VAT registered? — signals experience. Clients notice, because almost nobody else asks.

It generates repeat business. Investors who buy VAT-affected property once usually buy it again. A broker who handled it smoothly is the one they call.

The arithmetic that matters

Compare two outcomes on the same £1.5m case:

The VAT fee is the small line in that table. The senior fee is the large one, and it is the line that moves.

Disclosure

Whatever your arrangement, the client should understand it. Commission arrangements should be disclosed in line with your terms of business and your regulatory obligations, and documented before the case proceeds.

Where you intend to charge a client fee alongside a lender commission, that should be explicit and agreed in advance. VAT funding often arrives under time pressure, which makes clear prior disclosure more important, not less.

Making the economics work

Volume comes from systematising the question rather than reacting to it:

1. Ask the three VAT questions on every commercial case. Has the seller opted? Is the entity VAT registered? Is a TOGC intended?
2. Flag it early, while registration can still be arranged.
3. Package it once, properly — contract, VAT number, option to tax, completion date, quarter end.
4. Set it up as a contingency on TOGC deals, so you are ready if treatment fails.
5. Keep the senior lender informed, particularly if a second charge may be needed.

Done consistently, a modest fee on a facility that takes little time becomes worthwhile — and the completions it saves are worth considerably more than the fee itself.

This guide is general information, not financial or regulatory advice. Confirm commission terms with the lender and your disclosure obligations with your compliance adviser.