HMRC collects £50m in credit card fees for tax payments
12th August 2016 | News
HM Revenue and Customs (HMRC) has raked in £50m from credit card fees charged to taxpayers that have had to pay their outstanding tax bills on credit in the last five years, according to figures obtained by Telegraph Money.
Following a recent Freedom of Information request, it was found that almost 500,000 credit card payments were made to the tax authority in 2014-15 alone, resulting in £12m worth of fees charged to the taxpayer.
Credit card fees increased from 1.4 per cent to 1.5 per cent by HMRC, before reducing them again earlier this year to 0.6 per cent or lower – depending on the credit card used.
The amendments to credit card fees is a response to recent EU legislation capping the “interchange fee” i.e. the amount a retailer must pay to the credit card company at 0.3 per cent.
The figures collated by Telegraph Money indicate that paying tax bills via credit card is becoming increasingly popular, with the number of credit card payments rising from 423,347 in 2011-12 to 493,722 in 2014-15.
HMRC insisted it “doesn’t make a penny” from credit card fees and merely passed on the costs of accepting credit card payments by the department.
An HMRC spokesman said: “We are merely passing on what we are charged for processing a credit card payment.
“We introduced and published separate rates to better reflect the costs associated with different credit cards.”
Interestingly, James Daley of consumer rights researchers, Fairer Finance, believes paying taxes by credit card may be a more suitable option since credit card fees have fallen below one per cent; but he advised those tempted to read the small print and speak with their accountant first.
“There are credit cards giving you rewards of one per cent or more, but getting the best value from them isn’t always straightforward and people could get it wrong,” said Daley.
“It can make sense if you pay by credit card and then clear the balance by the end of the interest-free period – you are probably going to make the fee back in rewards.”
If you’re concerned about your tax liabilities your local TaxAssist Accountant can discuss your options with you. Please don’t hesitate to give our friendly team a call on 0800 0523 555 or drop us a line using our online enquiry form.