Many contractors may rely on their personal credit card when it comes to paying for their annual self-assessment tax return, however, HMRC is putting a stop to this method of payment. Currently, taxpayers are charged a fee by HMRC for paying by credit card, but from 13th January 2018, the EU Payment Services Directive 2 prohibits merchants (including HMRC) from recharging associated fees back to customers.
At the same time, HMRC is unable to absorb the cost of credit card fees as this would mean a cost to the public purse. The result is that HMRC will stop accepting credit card payment altogether. It’s worth noting that corporate, business and commercial credit cards are not affected by this change and personal customers will continue to have alternative payment options including direct debit, Faster Payment, BACs, debit card and CHAPs.
Low Incomes Tax Reform Group (LITRG) Chair Anne Fairpo, commented, “This change is likely to have an adverse effect on people on low incomes who rely heavily on their credit cards. The timing of the cessation of credit card payments will be particularly inconvenient with the 2016/17 tax payment deadline looming.” She advised, “An option for such taxpayers is to beat the change by filing their tax return and making payment by 12 January 2018. “If this is not possible and if taxpayers will have difficulty making payment as a consequence of the change, then they may be able to arrange ‘time to pay’ with HMRC, particularly if they apply before the payment deadline. Under this policy, taxpayers may be given the opportunity of paying their tax by instalments (paid by direct debit) rather than recovery proceedings being instituted for the full amount. Interest will still be charged on the late payments, but no penalties will be imposed.”
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