Important Changes to Tax
Payment Methods
Background
There are two important changes to the way tax can be paid to HM Revenue and Customs (‘HMRC’) which taxpayers need to be aware of. The changes will affect those taxpayers who either pay their tax at a Post Office or by a personal credit card, as both of these options are to be withdrawn.
In addition, taxpayers should be aware that HMRC may issue repayments to the last debit or credit card used to pay the tax, rather than the bank payment details entered on the tax return.
These changes will be of particular importance to those under the self-assessment tax regime with payments due by 31 January 2018.
Details
Tax Payments
Previously it has been possible to make payments to HMRC for various taxes at a Post Office. This method of payment has now been withdrawn by HMRC following the expiry of their contract with Santander.
If electronic payment methods are not available payment can still be made at a bank with a payslip or, for self assessment income tax, by post.
In addition, from 13 January 2018, HMRC will no longer accept payment using a personal credit card. This date coincides with the time when HMRC will no longer be permitted to charge a fee for credit card payments. Payments by a personal debit card will still be accepted and for companies HMRC will continue to accept payments by a company credit or debit card.
Tax repayments
The other recent change arises in regard to tax repayments where a taxpayer has previously paid their self assessment tax using a credit or debit card.
HMRC systems have been brought into line with banking industry standards so that, were possible, repayments are made back to the last credit or debit card used to make a payment on the self assessment account. This means that even where the taxpayer’s bank details are included on a tax return, HMRC may override these details and make the repayment to a card.
HMRC will make the repayment back to the last card used provided all the following criteria are met:
- The most recent payment on the account was made by that card;
- The payment was made after the implementation of the new process on 6 April 2015;
- The repayment due is no more than the amount of the last payment received on that card;
- The card payment was made within the previous nine months.
By way of example, if an individual submits their 2016/17 tax return on 31 January 2018 and had made a payment on account after 30 April 2017 using a credit or debit card, then if a refund is due to the individual at 31 January 2018, HMRC will issue the refund to that card.
If you have concerns about making a tax payment or receiving a refund, or would like more information regarding the above changes please contact our Tax Director, Jenny Marks.
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