Self Assessment Payments – Credit Card Or Post Office? Neither

Personal Taxation Services London

Personal Taxation Services London

Changes that have been ruffling more than a few feathers

With the deadline almost upon us for any self-assessment tax returns, this time of year can be a stressful time for business owners and accountants alike. Around 11 million of you are aiming to have your returns completed and submitted online, as of Jan 31st at the latest(!), I think you’ll agree that that is a lot of very precious data heading off through your browser.

It would be wise, given the current cyber climate to ensure your desktop, laptop, phone and tablet (we’ll forget about Phablets for now) are as watertight on the security front as they can be – more about our security suggestions relating to this in a later blog post, for now however I want to take a look at certain changes that have been ruffling more than a few feathers.

Removal of the option to pay via a Credit Card or via the Post Office

I was reading recently that a great number of people have been campaigning about changes HMRC are implementing, or have implemented, with the most vocal related to how you can pay your tax owed and we’re not talking about whether you have the money, rather the method of delivery.

Of course, by that I mean the removal of the option to pay via a Credit Card or via the Post Office.

Yes, thats right. If you weren’t already aware, as of December you are no longer able to make payments to HMRC via your local Post Office (or any other Post Office for that matter!) and since January 13th you have not been able to pay on your credit card either.

It should be said that this is no conspiracy, kindly remove your tinfoil hat if you’re to continue reading this blog post.

An attempt to save us taxpayers money

The Government isn’t trying to impose charges on you for not complying, or rather, not knowing that you had to comply. In fact, they have been pretty forthright with their marketing materials to inform of these changes. This is no money making scam as some have suggested. Quite the opposite, in fact, it is actually an attempt to save us taxpayers money.

You see it has all come about because of an imminent change to laws allowing charges to be added to your credit card transactions. No longer will you have to stomach excessive, unwarranted charges of around 3% everytime you wish to make a purchase on your flexible friend, should you have left home with it (is that advertising?).

Thankfully after a long drawn out ‘discussion’ about these charges, which started back in April 2012, it has been decided that no one in Europe should have to pay over the odds for a transaction fee which, in most cases, was just a few pence.

In the case of payments processed by HMRC the standard credit card fee was 0.6% but still, this is a fee that shouldn’t be placed upon the taxpayer, either directly or indirectly so.

Challenge any excessive charges that you’ve incurred

Another good thing to come out of these talks is that you will be able to go back and challenge any excessive charges that you’ve incurred, meaning there is a fair to good chance that the PPI calls you’ve been receiving on a minute by minute basis may no longer be the most irritating marketing calls you’ll receive. National Surcharge Helpline anyone?

Maybe the first people they’ll call will be Ryanair customers after they were consistently charged upwards of £6 per passenger per flight on top of the ticket price. They did, however, argue that this was not a processing fee but was related to their booking system? – Google it.

HMRC have rightly stated that they shouldn’t be the ones to foot the bill for a Credit card because let’s face it, this just means that the taxpayer will be settling the bill in a roundabout way.

So since the banks will still levy a small transaction on credit card transactions (retailers will just have to swallow these or adjust prices accordingly) the move to ban credit card payments was born and put into place, eventually.

There is a secondary concern

There is a secondary concern associated with this move which may be more telling. Many people may rely on their credit to pay bills and fees such as their tax, as such there is a fear that borrowing from elsewhere could skyrocket during this period.

‘Neither a borrower nor a lender be’ should be a mantra that we all live by but, especially in business, this isn’t always possible, regardless of Polonius’ wise intentions.

Hold a secondary bank account solely for tax incurred

The key here, like with many things is preparation, account preparation to be precise. Hold a secondary bank account solely for tax incurred, syphon off the funds you’ll need to pay to HMRC and work out your expenditure. Then you won’t be left hurridly seeking a Wonga loan at the last minute (other high-interest loan providers are available) to keep the tax man at bay.

We strongly advise against the above as this will certainly lead to bigger fees, further outgoings and spiralling costs. In fact, we strongly advise against using these high interest, instant approval firms full stop. A better course of action would be to contact HMRC as soon as you can and explain your situation. They aren’t there to simply impose fines, at the end of the day they are there to ensure you pay the right amount of tax and not a penny more.

Anne Fairpo of the Low Incomes Tax Reform Group (LITRG) recently said

Making payments may not be straightforward for some taxpayers, and we are keen to see that these changes are publicised as widely as possible. If making the tax payment will cause hardship, we strongly recommend people contact HMRC as soon as possible, and certainly before the due date of payment, to discuss their case.

HMRC have indicated that they haven’t skimped when it has come to telling the public about these changes. Letters have been sent, billboards have been covered and bus stops have been furnished with bite-size snippets of all the information you’ll have needed. It seems to be a case of just keeping your eyes peeled and tuned in to HMRC’s advances.

If you did have your wits about you then you may have enjoyed the sights of a duck that quacks (well… says) ‘tax’ while people do their darndest to ignore its unusual talent.

Not your average duck I think you’ll agree, anyway…

Why you can  no longer pay via the British institution that is the Post Office

Why though can you no longer pay via the British institution that is the Post Office? This is actually quite a different kettle of fish. The system that the Post Office had been using to process HMRC payments, and others, Transcash, was recently pulled by Santander and replaced by a new payment facility.

The Transcash system, operated through the Post Office, was removed by operator Santander, a spokesperson from HMRC said. Santander announced that Transcash had been replaced by a new electronic bill payment service, but that HMRC had opted against adopting the new facility.

So how can you pay your taxes

So how can you pay your taxes now that the Post Office and Credit card are off limits? Well, just about every other payment method is still available to you so it really shouldn’t be a major issue getting your funds to the right people.

We recommend setting HMRC up on your online banking, should you make use of it, and pass the money through this incredibly easy system. Not only will they receive your funds on time and with ease, you won’t even have to reach into your wallet for a card. If however you are feeling like you’ve left things too late and need the assistance of a professional, get in touch with us today and let us take the stress out of it for you.

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