HMRC has urged accountants, both in Cambridgeshire and nationwide, to remind their clients that, as of 13th January 2018, it will no longer be possible to settle a self-assessment bill with a personal credit card.
This comes as a response to the impending government ban on credit/debit card surcharges which is, in turn, a reaction to the EU directive PSDII, banning surcharges on Visa/MasterCard payments. The ban means that retailers and traders will no longer be able to pass on charges from their bank to users for spending via credit/debit cards in the form of a fee.
Accountants must remind their clients that anyone who tries to pay his or her self-assessment bill with a personal credit card after 13th January 2018 will have the payment refused. Instead, the bill will need to be paid with a business credit card, which many will not be in possession of, or to be paid via bank transfer or with a debit card.
A spokesperson for HMRC said, “We will no longer be accepting credit card payments from 13th January as new rules mean that we can no longer pass on what our bank charge for processing a credit card payment.”
According to a 2016 Freedom of Information request from Telegraph Money, HMRC has charged taxpayers £50 million in credit card surcharges over the past 5 years.
The statistics showed that nearly 500,000 payments were made to HMRC by credit card in 2014-15 which, in turn, led to more than £12 million in commission.
“It would be unfair to expect other taxpayers to pick up this cost,” the spokesperson continued. “There are a range of ways for people to pay us depending on the type of tax being paid, including debit cards, Direct Debit, Faster Payment and BACS.”
What are the implications of the new rules?
There have been concerns raised amongst the freelance community in light of the new rules. Some say that the measure could result in hard-pressed business being placed under even further pressure.
Many say that, whilst paying a tax bill with a personal credit card will always be a desperate last resort, removing the option could prove detrimental, especially to small business and sole traders. Quite simply, the ability to pay a tax bill with a personal credit card can, for some, be the difference between survival and going bust.
As a result of this many have argued that, in its effort to protect consumers against unfair credit card surcharges, the PSDII has indirectly removed an emergency payment facility that many struggling businesses have relied upon very heavily up until now.
Get advice from trusted accountants in Cambridgeshire
If you’re at all worried, Phebys Accountants recommends that you consult with your bank, as some credit cards will, as part of their balance transfer deals, offer the facility to move a lump sum into a bank account, in order to pay bills in the instance that credit cards are not accepted. There will be a transaction fee but, unlike most cash withdrawals, there are no interest charges for a specific period.
Phebys is a group of professional and proactive accountants in Cambridgeshire. If you have any further worries about HMRC’s credit card shutdown, please do not hesitate to contact Phebys on 01480 896267, or email firstname.lastname@example.org, and we will be more than happy to offer our advice.