Credit card charges for tax payments to be scrapped?
8th September 2017
Posted in Articles, Private Client by Andrew Marr
The issue
Accountancy firm UHY Hacker Young has called for HMRC to scrap credit card fees on taxpayers’ bills. The treasury had previously announced that it will outlaw such surcharges from January 2018. HMRC had already slashed its credit card charges to around 0.4% in April 2016.
Roy Maugham, tax partner at UHY Hacker Young said ‘People paying their tax bills on a credit card are likely to be cash-strapped already, and hitting people in that situation with an extra surcharge was always a pretty insensitive thing to do. Given the upcoming change in the law, HMRC should take the opportunity to do the right thing and drop credit card surcharges before it is forced to do it’.
Opportunity
Although credit cards offer a means for ‘cash-strapped’ people to pay their tax, it could generally be a good idea to pay tax by credit card if charges are scrapped. The reasons for this are as follows:
- Without charges the credit card will give a short period of interest-free credit.
- Credit cards often offer a variety of benefits such as shopping vouchers and air miles (or Avios). These could be enjoyed as a nice ‘bonus’ for paying tax.
Even with the 4% credit card charge (from internet forums) some people have been discussing the merits of paying tax by credit card to enjoy benefits. For example a year ago the Virgin Visa card was paying 1 flying mile for every £1 spent and the 0.4p a mile (0.4% charge) represented very good value compared to ticket prices.
If charges are dropped then it will be advisable for taxpayers to look at the small print of their particular card before seeking to benefit in this way as it is possible that some card providers will introduce terms and conditions to prevent tax payments from attracting benefits.
