Tax season is stressful, especially when you’re staring at your HMRC bill.
You might be wishing you could put it on your credit card for rewards, just like the old days. It’s frustrating that HMRC no longer accepts personal credit cards directly. Fortunately, some workarounds still offer perks.
Navigating HMRC Payments in 2024
HMRC’s decision to stop taking personal credit cards directly impacted individual and business taxpayers alike. Many relied on credit cards for convenience and reward points. What options are left for those wanting similar perks while fulfilling their tax obligations? Let’s explore how you can optimize your HMRC payments.
Using a Tesco Bank Debit Card
Consider a Tesco Bank current account debit card. Many debit cards offer few rewards. However, this one earns Clubcard points—one point for every £8 spent. These points are worth 2.4 Avios, 2.5 Virgin Flying Club miles, or 3p of Hotels.com credit.
Paying £1,000 in taxes earns 125 Clubcard points (300 Avios). Be aware of potential account opening restrictions with Tesco Bank currently.
Leveraging Billhop
Billhop is helpful for large tax bills, especially if you like American Express rewards or are aiming for a spending bonus. Billhop charges your credit card as a purchase, not a cash advance, so you still earn rewards. There’s a 2.95% fee.
The table below breaks down Billhop’s fees, illustrating the cost implications associated with varying income tax amounts.
| HMRC Tax Amount (£) | Fee @ 1% (£) | Fee @ 2% (£) | Fee @ 2.5% (£) | Billhop Fee @ 2.95% (£) |
| 1,000 | 10.00 | 20.00 | 25.00 | 29.50 |
| 5,000 | 50.00 | 100.00 | 125.00 | 147.50 |
| 10,000 | 100.00 | 200.00 | 250.00 | 295.00 |
| 15,000 | 150.00 | 300.00 | 375.00 | 442.50 |
Utilizing Curve
You could use Curve, which is a debit Mastercard linked to your credit cards. It transforms debit transactions into credit transactions, thus earning you points. While previously a simple way to gain rewards on HMRC payments, even with the free version, there’s now a 1.5% fee.
This fee is waived with the paid Curve Metal version (around £15/month). Weigh the costs and benefits to see if this approach aligns with your national insurance and tax planning strategies.
The Miles & More Global Traveller Mastercard
This Mastercard is treated as a prepaid card, not a credit card. This allows HMRC to process payments from it, with a rate of 1.25 miles per £1 spent. You will also need to file accurate VAT Registration forms.
However, be aware of HMRC’s scrutiny towards business and VAT payments via this card. Individual international tax or income tax filings may fare better with this method, provided it complies with local bank holidays.
Exploring Fintech Solutions (Use With Caution)
Some fintech solutions link credit cards to accounts that are processed as purchases. These options are unreliable because policies change frequently. New apps may emerge offering similar services. Businesses, both small and large, and sole traders, find value in credit card payments for HMRC (indirectly). Rewards, convenience, and occasionally extended lines of credit for covering tax debt are some of the attractive features.
Paying HMRC with a credit card directly is no longer possible. However, workarounds exist for those seeking rewards and flexible payment options. Research thoroughly before choosing a method. You can find additional information onpaying your VAT, paying self assessment tax bills, and paying corporation tax online.
Read more:
How to Pay HMRC with Credit Card