Self assessment credit card shutdown deadline looms

Cutting a credit card
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HMRC has urged accountants to remind their clients that from 13 January 2018 it will no longer be possible to settle a self assessment bill with a personal credit card.

The credit card ban is a response to a government ban on credit and debit surcharges in the UK, which is itself a reaction to EU directive PSDII, which bans surcharges on Visa and Mastercard payments.

From 13 January retailers and traders will no longer be able to pass on charges to users for spending via a credit or debit card. Anyone trying to pay their self assessment bill with a personal credit card after this date will have their payment refused.

Instead, they will have to use a business credit card - which many will not have - or pay by bank transfer or debit card.

£50m over the previous five years

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

A Freedom of Information request from Telegraph money in 2016 revealed that HMRC charged taxpayers £50m to pay their taxes by credit card over the previous five years.

The statistics showed that almost 500,000 payments were made to HMRC by credit card in 2014-15, resulting in more than £12m in commission.

“It would be unfair to expect other taxpayers to pick up this cost,” continued the tax authority spokesperson. “There are a range of ways for people to pay us depending on the type of tax being paid, including debit cards, Direct Debit, Faster Payment and BACS.” 

‘Seriously detrimental’ to small business

Concerns have been raised among the freelance community that the measure could result in hard-pressed businesses being put under further pressure.

Paul Phipps, director of Curtis Recruitment, told AccountingWEB that while paying a tax bill by personal credit card is always a desperate, last resort, removing it as an option could prove “seriously detrimental” to small business and sole traders especially.

“It could mean the difference between survival and going bust,” said Phipps. “In an attempt to protect consumers against unfair credit card usage fees, the PSDII has indirectly removed an emergency payment facility that some struggling businesses rely upon and whichever way you look at it, this is not good for the UK”.

However, on the Any Answers board AccountingWEB member Marion Hayes believes the ban will not have as big an impact as suggested.

“My cards all offer as part of the balance transfer deals the facility to put a lump sum into a bank account to pay for bills where they do not accept cards. You have to pay a transaction fee I understand, but unlike ordinary cash withdrawals there are no interest charges for a specified period.”

Window closes on Post Office payments

In related news, from 15 December 2017 payments to HMRC will also no longer be accepted at the Post Office due to the withdrawal of the Post Office Transcash service.

An HMRC spokesperson confirmed that the facility in its current form has been withdrawn by Santander.

“HMRC is not the only users of this service and had no influence on this decision. We are writing to customers who have paid us via the Post Office to advise they will no longer be able to make payment using this facility.”

About Tom Herbert

Tom is acting editor at AccountingWEB, responsible for all editorial content on the site. If you have any comments or suggestions for us get in touch.

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10th Nov 2017 11:57

Strangely enough this mornings post included a general mailshot asking if I want a business credit card as well as my personal one - killer detail - interest 24.69%

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10th Nov 2017 17:01

Surely it would be much cheaper to wait until the end of Feb before paying anyway, HMRC rates of interest are much lower than credit card rates.

If you plan on not paying the card off at the end of the month, then again the 5% would still seem attractive vs a couple of months of credit card charges.

Not sure what the problem is.

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10th Nov 2017 17:11

always makes me laugh when businesses (or in this case HMRC) restrict the way in which you can pay....for any other business it means thy are likely to lose custom....in this case less likely to get paid immediately....

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to justsotax
12th Nov 2017 19:17

HMRC is not a business, it runs to rules set out in legislation or government policy.

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