From 13th January 2018, HM Revenue & Customs will no longer be accepting personal credit cards for tax payments. If you are a sole trader or a limited company director, this affects you.
What does this mean?
In the UK, you will no longer be able to make payments for income tax, PAYE, VAT or any other type of payment using your personal credit card from 13th January 2018.
Whether you are self-employed or a limited company director, you will not be able to pay your tax bills via your own credit card – you must find other means to make the payment.
The government is attempting to crack down on charges implemented by credit card processors – they have banned surcharges being passed down to consumers paying for goods and services via credit card. However HMRC has decided to stop accepting personal credit cards altogether as it claims it is unable to absorb the costs of credit card fees being passed down by card processors.
The move by the government aims to stop organisations that effectively punish consumers who pay by credit card by issuing surcharges. Those organisations which are caught charging for the use of credit cards will be forced to repay the fees to consumers, and will face fines if they refuse.
For instance, over the past five years, HMRC has passed down £50 million in credit card surcharges to taxpayers who are paying their bills via credit card.
Merchants and organisations in the UK, including government bodies, will have to absorb the cost of accepting both credit card and debit payments going forward – or else decline to accept them whatsoever as HMRC has done.
Regarding the inability to use personal credit cards for income tax, PAYE or VAT payments, many contractors and freelancers won’t be happy. Being able to pay a tax bill via credit card does give you greater choice, and a way of planning your payments in advance; however the bonus is that you will not have to pay a credit card surcharge.
There are several alternative payment methods to paying your tax bills. Other payment options include:
- Online or telephone banking
- Debit card
- Direct debit withdrawal
You will be unable to pay tax bills to HMRC through Post Offices from 15thDecember 2017.
What do you think of these changes to HMRC’s tax payment processes? Do you think HMRC should absorb the cost of the surcharges that are passed down from credit card processors, or do you agree with its decision?
Leave us a comment below.
If you have any questions regarding your personal tax, or need help completing your 2016/17 Personal Tax Return, please contact us.