How to Pay Hmrc With A Credit Card

Paying your HMRC tax bill with a credit card can be a convenient option. This guide outlines the key considerations and general steps to navigate the process successfully and securely.

1. Confirm Eligibility and Method: First, verify that HMRC accepts credit card payments for your specific tax liability. Payment methods can change, so always check the official HMRC website for the most current information and accepted third-party payment providers.

2. Choose the Right Card: Selecting the appropriate credit card is crucial. Consider using a card that offers rewards, cashback, or a low interest rate to offset any transaction fees. You can use Kudos' Explore Tool to compare options for this significant payment.

3. Gather Your Information: Before starting, have all necessary details ready. This typically includes your 10-digit Unique Taxpayer Reference (UTR) or other payment reference number, the exact amount you need to pay, and your credit card information.

4. Make the Payment Securely: Use the official HMRC online service or an approved third-party payment processor to make your payment. Be aware that third-party providers charge a non-refundable fee for processing credit card transactions, which will be added to your total.

5. Keep Detailed Records: After completing the transaction, save a digital or physical copy of the payment confirmation. This receipt is your proof of payment and includes important details like the date, amount, and transaction reference number.

Impact On Your Credit Score

Paying your HMRC bill with a credit card can be a convenient option, but it's important to understand the potential effects on your credit score. Here are a few key factors to consider before you proceed.

• Credit Utilisation Ratio: A large tax payment can significantly increase your credit utilisation, which is the amount of credit you're using compared to your limit. A higher ratio can negatively impact your credit score, so it's best to keep it low.
• Payment History: Successfully paying your tax bill and then your credit card statement on time contributes positively to your payment history. However, failing to pay the credit card balance can lead to high interest and damage your score.
• Cost of Borrowing: While convenient, remember that you are essentially taking out a loan. If you can't clear the balance quickly, the interest charges can make this a very expensive way to pay your tax bill.

Alternative Ways To Pay Hmrc

Direct Debit or Bank Transfer

One of the most common methods is setting up a Direct Debit, which allows HMRC to automatically collect the amount due on a specified date. This is particularly useful for recurring payments like Self Assessment. Alternatively, you can make a direct payment through your online or telephone banking service. This method provides more immediate control, as you initiate the transaction yourself using your unique payment reference number for each payment.

In-Person and Postal Payments

For those who prefer handling payments offline, you can pay at your own bank or building society. Some Post Office branches also accept payments if you have a paying-in slip from HMRC. Another traditional option is to mail a cheque directly to HMRC. If you choose this route, ensure you post it well in advance of the deadline to account for any potential postal delays and avoid late fees.

Choose the Right Card to Pay Hmrc

When settling a large payment like your HMRC tax bill, the credit card you choose can significantly impact your finances. Selecting the right one means you could be maximizing rewards, avoiding high fees, or unlocking valuable perks. Instead of navigating the crowded market alone, the Kudos Explore Tool can help you find your perfect match. It lets you compare nearly 3,000 cards to find the best option for your specific needs, ensuring you get the most out of your HMRC payment.

If you want to get more from your credit cards, Kudos is the essential free tool for your online purchases. We're also offering $20 back after your first eligible purchase—just sign-up for free with code “GET20” and make a purchase at a Boost merchant.

Frequently Asked Questions

Are there fees for paying HMRC with a credit card?

Yes, third-party payment providers charge a non-refundable fee for processing credit card payments made to HMRC.

Can I earn credit card rewards on my tax payment?

This depends on your card issuer. Many providers exclude tax payments from rewards, so check your terms.

How long does a credit card payment to HMRC take?

Payments typically take a few business days to process, so always pay well before your official deadline.