The HMRC has announced that taxpayers will no longer be able to pay their tax bills by credit card. A letter sent out to taxpayers last month confirmed that HMRC would “no longer accept payment by personal credit card”. Coming into force from 13th January, the ban leaves those completing their annual tax returns just eighteen days to find the funds to pay their tax for 2016-17.
In 2016/17 alone, more than 454,000 tax payments to HMRC were made via credit card, worth a total of £741 million. Whilst this reportedly only makes up 0.8% of payments received, many believe the change will have a significant impact on the thousands of taxpayers that rely on this payment option.
The Government announced their ban on “rip off” card fees last summer following a new EU directive. This made it illegal for all UK companies, including HRMC, to charge their customers for paying by card. The change also means that businesses are now liable to pay all bank charges for processing card payments themselves.
A spokesman for HMRC has said that “it would be unfair to expect other taxpayers to pick up the cost” of processing the credit card payments, and that absorbing the cost of the fees themselves would damage their service and still impact on taxpayers.
Almost half a million people in the UK currently spread the cost of their tax bill over several months by using a credit card. The Low Incomes Tax Reform Group has said the change will have a massive impact on those on low incomes who rely on credit cards to meet these liabilities.
Following the deadline, those reliant on credit cards will be left to find alternative methods, such as taking out a personal loan or using money transfer credit cards to transfer funds to their bank account. They may also be able to negotiate “time to pay” with HMRC to settle their liabilities.