Taxpayers warned over credit card payments

Date: 22nd January 2009

Taxpayers have been warned to think carefully before deciding to settle their bills using a credit card.

The advice comes from Moneywise.co.uk in response to a recent HM Revenue and Customs (HMRC) decision to allow taxation payments to be made through credit cards.

While doing so will attract a 1.25 per cent fee from HMRC automatically, additional credit card interest rates could also make the final amount significantly more.

A spokesman for the Consumer Credit Counselling Service, Tom Howard, told Moneywise.co.uk: "On one hand, it is good that HMRC is allowing people to be more flexible, but there is a real risk that people could stick their bill on credit card without knowing how they are going to pay it off."

He added that taxpayers should always "weigh up pro and cons" of paying by others ways, such as an overdraft or loan, which could have lower interest rates.

Earlier in the week research by Unbiased.co.uk showed that almost £2 billion in inheritance tax was paid unnecessarily last year.