As of 13 January – two weeks before the 31 January deadline for submitting self-assessment tax returns – HM Revenue and Customs (HMRC) are to ban credit card tax payments, meaning that those who were planning on completing their annual tax returns with this method now have to find another way to raise funds to pay their annual taxes.
This ban is due to the new EU rules, meaning that HMRC will no longer be able to pass on the bank charges that process credit card payments.
HMRC sent out a warning earlier this year about the new introduced ban, saying: “From January 13, 2018, HMRC will no longer accept payment by personal credit card. Debit cards and corporate credit cards continue to be accepted.”
An HMRC spokesman also said: “New rules mean that we can no longer pass on what our bank charges for processing a credit card payment. It would be unfair to expect other taxpayers to pick up this cost. There are a range of ways for people to pay us, depending on the type of tax being paid.”
The move was designed to help consumers save around £473 million a year. However, this move failed for HMRC as merchants could still be charged by card providers for accepting credit card payments, and because HMRC said they would still have to charge those costs back to taxpayers they decided to ban credit card payments altogether.
James Daley – managing director of Fairer Finance – said that the ban was “a very un-consumer friendly move by HMRC which restricts consumer choice.” He also stated that “It will be a blow for people who want to spread out the cost of paying their tax bill by putting it on credit card and could force some people to take out loans. There is also a danger that other departments and councils may see this as an opportunity to follow suit.”
Research shows that more than 450,000 tax payments were made to HMRC through credit card payments in 2016-17 alone, worth a total of £741 million. Taxpayers have been advised to pay for their bills via debit card, direct debit, faster payment or BACS. Taxpayers will also need to keep in mind that these payment times vary, so they will need to make sure that their money reaches HMRC by the deadline depending on what method they choose.
What to do if you are struggling to pay
If you are struggling to come up with the funds to pay for your tax bills before the deadline, perhaps you might want to consider taking out a secured loan.
To get the basics out of the way, a secured loan is money you borrow that is secured against an asset that you own, normally your home. You do not need to have a perfect credit score to be eligible for a secured loan, plus the rates can be relatively low meaning that your monthly repayments will be more affordable.
Here at Basik Money, we offer secured loans with rates from as little as 3.65% APR compared to credit cards which can charge an average of 16% APR.
Keep in mind that if you fail to keep up with the repayments, you can lose ownership of your home, but the process for the lender to possess your home is complicated and happens less frequently.
If you feel that you are finding it difficult to come up with the funds to pay your tax bills this year, then consider getting in touch with Basik Money today on 0330 041 2299 for a free impartial chat with one of our qualified advisors.
