HMRC stop customers paying tax on personal credit cards

George Hay Chartered Accountants

In the past, you may well have relied on your personal credit card to pay your tax bill, but this year you will need to arrange an alternative method of payment.

Credit card payments will no longer be accepted by HM Revenue & Customs (HMRC), effective 13 January 2018, just two weeks ahead of the self-assessment deadline on 31 January.

HMRC’s veto on credit card payments will apply to income tax, PAYE, VAT and any other tax payment due after the implementation date. It is important to note, however, that the restrictions apply only to personal credit cards; business, commercial and corporate cards remain unaffected.

In 2016/17 alone, in excess of 454,000 tax payments were made via credit card to HMRC, worth around £741 million and so the move is likely to have a significant impact on the 11m taxpayers currently preparing to file their returns and settle their tax liabilities at the end of this month.

The decision follows the introduction of a new Government initiative, banning the practice of passing on credit card charges to consumers whether by commercial enterprises or Government bodies.

The initiative was originally intended to make it easier for consumers to pay for goods and services in this way, but it has seemingly backfired.

HMRC has said it would be “unfair” to absorb the charges associated with credit card payments because this would inevitably mean that they would need to charge the costs back to customers via the ‘public purse’.

The last five years have seen HMRC pass on £50 million in credit card charges to taxpayers, according to The Telegraph.

An HMRC spokesman told The Telegraph: “We will no longer be accepting personal credit card payments from the 13 January as new rules mean that we can no longer pass on what our bank charges for processing a credit card payment.”

When it comes to arranging an alternative method of payment, the following are available:

  • Debit cards;
  • Direct Debit;
  • Faster Payment and,
  • BACS

Depending on the method of payment that you choose, the time it takes to reach HMRC will also vary. Ensure that you take into account the specific payment time to avoid missing the deadline.

The Low-Income Tax Reforms Group (LITRG) amongst others have expressed their concern over the removal of such a mainstream method of payment warning of the ‘adverse’ effect it is likely to have on those with low incomes who rely heavily on credit cards to take care of their liabilities and enable them to spread the cost over a number of months.

Taxpayers have largely criticised the ban, arguing that the changes were not well publicised and that the relatively short notice has left many feeling like the rug has been pulled from under their feet.

Consumer groups have also warned that this may set a dangerous precedent for the future, should other councils and Government departments see fit to follow suit.

If you anticipate that you may run into difficulties when it comes to paying the tax that you owe on or before 31 January, you should speak to your adviser or HMRC at the earliest opportunity.

If you’re not already one of the thousands of people who let an accountant handle their self-assessment tax return, take a minute to read our blog post ‘The dangers of DIY tax returns; Why risk it?’. By entrusting us with your tax return you can take comfort in the knowledge that your tax affairs are being taken care of quickly, efficiently and compliantly.

If you’d like to discuss your circumstances in more detail, call us today on 01767 315010 or fill in one of our online enquiry forms here.


Link: Taxpayers banned from using credit cards to pay personal tax bills

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