UK Government Charges People For Using Credit Cards To Pay Their Tax Bill

HM Revenue & Customs (HMRC) has reportedly charged taxpayers £50 million over the last five years for the convenience of paying their taxes by credit card.

According to a report by The Telegraph, which relied on statistics obtained from a Freedom of Information request, close to 500,000 payments were made to pay taxes by credit card in the 2014–2015 year alone. This yielded £12 million in commission for the U.K. government department. The report noted HMRC has raised the amount it charges for credit card transactions and moved to lower it earlier in the year for certain types of credit card payments. The change was prompted by a new European Union rule that places a cap on the interchange fee, or the amount the retailer has to pay to a credit card company for accepting payments by credit card.

The statistics also show that, in the U.K., paying the tax bill by credit card is gaining in popularity, with the number of payments rising to 493,722 in 2014–2015 from 423,347 in 2011–2012. According to the report, HMRC said it doesn’t make any money from the fees and passes on what taking credit card payments costs it. “We are merely passing on what we are charged for processing a credit card payment. We introduced and published separate rates to better reflect the costs associated with different credit cards,” a spokesperson said in the report.

The increased use of credit cards to pay for taxes could be driven by two things. For starters, more people are self-employed and, as a result, have to pay taxes on a full year’s income at once. The other motivation? Rewards for using credit cards. The report noted that people will use their credit card to pay taxes to earn air miles or other rewards points.