You won’t be able to pay with a personal credit card from 13 January 2018.
This change was instigated by the Second Payment Services Directive (PSD2), which outlined that there could be no onward charging consumers for credit or debit cards. This includes HMRC who have said that they cannot absorb the costs of the merchant providers for credit card facilities and therefore no payments will be taken by credit card. Debit cards payments will still be possible, as the underlying costs are not as high.
This is happening at the peak of self assessment time! so it will be a nightmare for tax payers
Contact HM Revenue and Customs (HMRC) as soon as possible if you can’t pay all your tax on time.
You may be able to either:
get more time to pay
pay your bill in instalments by direct debit
But HMRC are generally reluctant to agree time to pay unless there are exceptional circumstances.
So an alternative might to use interest free credit cards.
Here is some great advice from Martin Lewis
Do it right and credit cards are the cheapest way to borrow. You can get 0% for up to 27 months – yet get it wrong and you’ll be stuck in debt for years.
Done right, it’s possible to borrow at no cost.
Make at LEAST the minimum repaymentsEnsure you set up a direct debit for at least the minimum repayment as soon as you are accepted. Even though you’re paying 0%, you still need to make repayments. If you miss one, you will lose your 0% deal, so the rate will jump and you’ll get a £12 charge.
However, don’t almost clear your card in full – clear it IN FULL if you can. For example, if you’ve £1,000 debt from spending on a credit card and pay off £999, the fact it’s not cleared IN FULL means you pay a month’s interest on the whole amount.
So if you can nearly clear your card, do what you can to totally clear it (even if it’s a 0% spending card it’s a good habit to get into).
Clear the card within the 0% periodGo even one month beyond the promotional period and the rate rockets, so calculate the amount needed to clear the balance by then. For example, borrow £600 on a year’s 0% card, divide the spend by the number of months (£600 / 12) to get the monthly repayment – in this case £50 – and set up a direct debit to do that.
Diarise the end datesIt’s incredibly vital you make a note of the 0% end dates (or use the Tart Alert) to make sure you pay off the debt in time, or be ready to switch to a new Best Balance Transfer deal. If you forget to switch when the deal ends, the interest cost will swiftly outweigh the card’s benefit.
It’s not uncommon for Directors and Senior Employees to get behind with their expense claims and paperwork, they are busy people trying to build their businesses and sometimes the paperwork gets put to one side.
But lets consider the recent HMRC case against the Directors of RSL (NorthEast) Ltd. Mr White was Director of RSL and he had a company credit card which he used for business and personal expenses, he travelled extensively on company business. Unfortunately RSL became insolvent, so HMRC assessed Mr White on credit card expenses as a benefit in kind.
Mr White appealed on the basis that he had lent the company large amounts of his own money and any credit card expenses were just a reimbursement.
“Section 203(2) ITEPA does not grant any right to retrospectively make good a benefit. Income tax is an annual tax, and the value of the benefit depends upon what is made good in that tax year.”
“Any “rewriting” [to reflect the money reimbursed to RSL] would have a retrospective effect on the Company accounts.” HMRC implied that this would not be allowed.
HMRC won the case, but mainly because the accounts were in a terrible shambles!
What can we learn from this?
Keep good records, don’t put off doing your accounts!