Its Q& A Friday! You may be wondering, why can’t I pay my taxes with a credit card? HMRC took the decision two years ago to ban credit card payments to pay your tax bill.
The main reason being to avoid the small credit card fees they would incur if they did!
Haven’t paid your tax bill yet?
If you have yet to pay your tax bill from the 31 January deadline, from Sunday 1st March you will face a 5% penalty based on any unpaid tax. This is exacerbated if you are also due to make a payment on account, in effect you are also due a forward payment on this year’s taxes.
If you delay a further six months after 1 March, you will incur an additional 5% penalty on any unpaid tax.
The ban on the use of credit cards means that cash strapped businesses and individuals have no other option but to set-up a payment plan with HMRC. According to statistics provided by HMRC, over 600,000 individuals and business directors have had to set up a payment plan this year, via HMRC’s ‘time to pay’ schemes.
Although in theory a payment plan might seem a better option that using a credit line, the ‘time to pay’ schemes offered by HMRC are known to be inflexible and much effort and time is spent setting them up to ensure favourable terms.
Cash flow management
If you are struggling with cash flow management, get in touch to see how we can help. Incurring penalises from HMRC when you may already be financially struggling can be incredibly difficult to cope with and have a direct impact on how you run your business and keep it afloat.
Written by Shaima Todd