RSM is advising taxpayers wishing to pay their tax by credit card to act now before HMRC stops accepting personal credit card payments.
Although the deadline for submitting 2016-17 self assessment tax returns is 31 January, HMRC will no longer accept personal credit card payments for tax from 13 January. RSM is advising those who wish to make a payment on account using their credit card to do so now, even if they won’t be filing their tax return until after 13 January.
HMRC has decided to discontinue accepting credit card payments because of new rules which remove the ability for merchants, including HMRC, to charge back fees for payments made by personal credit cards to the customer. As a public funded body, HMRC is unable to absorb the cost of personal credit card fees as this would mean charging the fees back to customers through the public purse.
Last year, there were 454,000 personal credit card tax payments worth a total of £741m.
Karen Clark, private client tax partner at audit, tax and consulting firm RSM said:
‘Given there were almost half a million tax payments made by credit card last year, this decision will affect thousands of taxpayers, many of whom will be taken by surprise. Among those most at risk will include people who have overspent over the Christmas period or sole traders struggling with cashflow difficulties.
‘Taxpayers also need to take care not to incur a late payment surcharge. A surcharge of 5 per cent is applied to any tax amount outstanding 30 days after it falls due. If people realise too late that they are unable to pay by credit card and have no other means to pay, they could unwittingly end up with a hefty penalty.’