New EU rules make it illegal to pay tax bill using your credit card

tax bill credit card

Taxpayers are to be banned from using credit cards to pay their annual bills it has emerged.

Information from HMRC shows that almost half a million people spread the cost of their tax bill over several months by putting it on a credit card each year, but from January 13 – just two weeks before this year’s self-assessment tax return deadline – the taxman will decline all personal credit card payments.

The ban is a response to new EU rules that make it illegal for all businesses, including HM Revenue and Customs, to pass on the 1.5 per cent fees that banks charge to process each credit card payment.

As a result, instead of covering the cost of the charges itself, HMRC has banned the use of personal credit cards when making a payment.

The timing of the ban is likely to cause problems for some of the 11 million people aiming to complete their annual tax return by the January 31 deadline.

Andrew Snowdon, partner at UHY Hacker Young, the national accountancy group, said: ‘It beggars belief that HMRC would take such a customer-unfriendly approach – using a credit card may be the only way some taxpayers can afford to pay their tax bills.

‘The ban comes at a tough time in the economy and is insensitive to say the least. Instead of finding a way to implement the new rules, HMRC has simply dropped a mainstream payment method.’

HMRC sent out written warnings with tax bills earlier this month, 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.’

In 2016-17, about £3million in credit card fees charged by banks were then passed on to customers by HMRC. The taxman said absorbing the cost of these fees would damage its service and leave taxpayers worse off.

HMRC 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.’