As of 13 January 2018, HM Revenue & Customs (HMRC) won't accept any payments using a personal credit card. Debit card and corporate credit cards on the other hand will continue to be acceptable as a payment option. This is particularly relevant given 31 January represents the tax return submission deadline and payments on account due date for 2016/17 tax liabilities.
HMRC sent out a written warning recently that tax bills could no longer be paid using a personal credit card. The reason being the Revenue can no longer pass on bank charges for processing these specific payments. Unfortunately this isn't good news for many as according the the Financial Times, there were 454,000 personal credit card tax payments in 2016/17 totaling £741m and £3.2m in bank fees.
Such a change comes at a time when new rules are being brought in to make it illegal for businesses to charge extra where payment is made using a credit or debit card. This is the result of an EU directive which was designed to tackle the use of unfair card charges on consumers.
The result is nearly half a million people who were hoping to defer their annual tax bill by paying with their personal credit card will now have to seek alternative arrangements. This will be a surprise, particularly for the self employed who are said to be more likely to pay by credit card as a way to prolong settling the cost of a significant tax liability.
Whilst the legislation has been in place for some time, HMRC have been criticised for leaving the communication of these changes to just before the first payment on account and balancing payment deadline. The issue being this doesn't provide people with that much time to plan and consider other options for settling their tax bill.
Of note, payment by cash or cheque at the Post Office is also no longer available following the end of the Post Office Transcash service. If you really want to use your credit card to pay your tax liability then you'll need to do this prior to 13 January 2018. Post this date, if funds are tight then you should contact HMRC and negotiate with them on "time to pay", which is in effect a payment plan. Otherwise failure to pay on time will result in self assessment penalties being applied.
Ultimately this all highlights the need to set money aside regularly in order to be confident of fulfilling your tax liabilities by the set deadlines.
The content of this post is up to date and relevant as at 05/01/2018.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.
leave a comment -