A tax bill arriving at the wrong time is a financial pressure that most people have faced. When cash flow is tight, reaching for a credit card feels like a logical solution. But when it comes to paying HMRC, the rules are more specific than most people realise, and the costs involved are worth understanding before you commit.
This guide covers exactly what HMRC accepts, what it costs, and what your options are if you cannot pay on time.
Can You Pay Your UK Tax Bill With a Credit Card?
The short answer is no, not directly. HMRC stopped accepting personal credit card payments in January 2018. This decision followed the EU’s Payment Services Directive, which banned retailers and service providers from passing card surcharge fees on to consumers. Since HMRC was unable to absorb the processing costs of personal credit card transactions, it removed the option entirely.
What HMRC Does And Does Not Accept:
| Payment Method | Accepted by HMRC |
| Personal credit card | No, removed January 2018 |
| Personal debit card | Yes |
| Corporate credit card | Yes, surcharge applies |
| Corporate debit card | Yes |
| Bank transfer (Faster Payments) | Yes |
| CHAPS | Yes |
| Direct Debit | Yes |
| BACS | Yes |
| Cheque | Yes |
| Cash at Post Office | Yes |
If you want to use credit to pay your tax bill, a corporate credit card is the only direct route, provided your business holds one, and the tax liability is a business obligation. Personal credit cards are simply not an option through HMRC’s payment systems.
Which Types of Tax Payments Does HMRC Currently Accept?
HMRC handles a wide range of tax payment types. The accepted payment methods vary slightly depending on the tax type, but bank transfer, debit card, and Direct Debit cover the vast majority of situations.
| Tax Type | Common Payment Methods Accepted |
| Self-Assessment Income Tax | Bank transfer, debit card, Direct Debit, cheque |
| PAYE and National Insurance | Bank transfer, Direct Debit, debit card |
| Corporation tax | Bank transfer, debit card, CHAPS |
| VAT | Bank transfer, Direct Debit, debit card |
| Capital gains tax | Bank transfer, debit card, or through Self Assessment |
| Inheritance tax | Bank transfer, cheque, Direct Debit |
| Stamp Duty Land Tax | Bank transfer, debit card |
| Customs duties | Bank transfer, Direct Debit |
The fastest and most reliable method for most tax payments is Faster Payments via online banking. Payments typically reach HMRC the same day or the next working day. Always use the correct payment reference, typically your Unique Taxpayer Reference (UTR) followed by the tax year or period. An incorrect reference can result in HMRC failing to allocate your payment correctly.
What Is the Fee for Paying Taxes With a Credit Card?
Personal credit cards carry no fee, because they are not accepted. For corporate credit cards, HMRC charges a non-refundable processing fee on top of the tax amount owed.
| Card Type | Fee |
| Personal credit card | Not accepted |
| Personal debit card | No fee |
| Corporate debit card | No fee |
| Corporate credit card | 0. fee, check HMRC’s current rate at gov.uk |
The corporate credit card surcharge is set by HMRC and reflects the merchant processing cost. It is non-negotiable and non-refundable, even if you subsequently pay the same amount through another method. Always check the current surcharge rate on HMRC’s official payment pages before using a corporate card, as rates are subject to change.
The Indirect Credit Card Route, Third-Party Services
Some third-party services allow individuals to pay HMRC indirectly using a personal credit card. These platforms accept your credit card payment and transfer the funds to HMRC on your behalf, typically charging a service fee of 1% to 3% of the transaction value. This is legal but expensive. On a £10,000 tax bill, a 2% fee adds £200 to your cost. The credit card interest on top of that compounds the expense further.
What to Do If You Cannot Afford to Pay Your Tax Bill on Time
If you cannot pay your tax bill by the deadline, the worst thing you can do is ignore it. HMRC has structured support options for taxpayers in genuine financial difficulty, and accessing them early produces significantly better outcomes than waiting for penalties to accumulate.
- Set Up A Time To Pay Arrangement
HMRC’s Time to Pay scheme lets eligible taxpayers spread their bill across monthly instalments. For Self Assessment bills under £30,000, set it up online through your HMRC account. For larger amounts, call HMRC’s Payment Support Service on 0300 200 3835. You must have filed your return and have no other outstanding HMRC debts to qualify. Interest accrues throughout, but proactive engagement reduces or waives penalties.
- Contact HMRC before the deadline
Contacting HMRC before your payment deadline, rather than after, signals good faith and significantly improves the outcome. HMRC distinguishes between taxpayers who engage proactively and those who avoid contact until enforcement action begins.
- Consider A Personal Loan Or Overdraft
A personal loan or authorised overdraft from your bank may offer lower interest rates than HMRC’s late payment interest and lower fees than third-party credit card payment services. If you need to borrow to pay a tax bill, compare the true cost of each option before committing.
- Seek Professional Advice Promptly
If your tax debt is significant or you have multiple outstanding liabilities, a qualified tax adviser or accountant can negotiate directly with HMRC on your behalf. They can also identify whether any of the underlying tax liabilities can be reduced through legitimate reliefs or corrections before the payment is made.
The options available to you narrow the longer you wait. Early action keeps you in control, delay hands that control to HMRC.
What Happens If You Miss a Tax Payment Deadline With HMRC?
Missing a tax payment deadline has immediate and escalating consequences. Understanding the penalty structure reinforces why acting early is always the better option.
Self Assessment: Late Payment Penalties And Interest:
| Time After Deadline | Consequence |
| Day 1 onwards | Interest charged at HMRC’s current rate (Bank Rate + 2.5%) |
| 30 days late | 5% surcharge on unpaid tax |
| 6 months late | Further 5% surcharge on unpaid tax |
| 12 months late | Further 5% surcharge on unpaid tax |
Paye: Late Payment Penalties:
| Number of Late Payments in Tax Year | Penalty Rate |
| 1 late payment | No penalty (first default) |
| 2–3 late payments | 1% of the amount is late |
| 4–6 late payments | 2% of the amount is late |
| 7–9 late payments | 3% of the amount is late |
| 10 or more late payments | 4% of the amount is late |
| 6 months late | Additional 5% penalty |
| 12 months late | Further 5% penalty |
VAT: late payment penalties (new penalty regime from January 2023)
HMRC introduced a points-based penalty system for late VAT payments. Each missed payment accrues a penalty point. Once a threshold is reached, a fixed £200 penalty applies, plus further penalties for sustained non-payment. Interest accrues from the first day of late payment.
In all cases, HMRC can escalate to enforcement action, including debt collection, county court judgements, and in serious cases, asset seizure or insolvency proceedings. These outcomes are avoidable with early engagement.
Risks of Using Credit to Pay Your Tax Bill
Using credit to meet a tax obligation carries real financial risk. Understanding those risks before committing is essential.
- High Interest Costs Compound The Original Liability
Credit card interest rates, particularly on personal cards, typically range from 20% to 30% APR. If you cannot clear the balance quickly, the interest cost on a £5,000 tax bill can add hundreds of pounds within months. You are not avoiding the tax cost, you are adding a financing cost on top of it.
- It Masks An Underlying Cash Flow Problem
Using credit to pay taxes suggests a cash flow issue that will not disappear after the payment is made. The next tax bill will arrive on the same schedule. Without addressing the root cause, whether through better tax planning, a payment on account strategy, or improved cash reserves, the same pressure recurs.
- Third-Party Payment Fees Are Non-Refundable
If you use a third-party service to pay HMRC with a personal credit card, the service fee is charged regardless of the outcome. If you subsequently dispute the payment, the fee is not returned. These costs are small individually but significant at scale.
- Corporate Card Misuse Carries Compliance Risk
Using a company credit card to pay a personal tax liability, rather than a genuine business tax obligation, creates accounting and tax complications. Personal use of a company card is a taxable benefit in kind and must be reported on a P11D. Misclassifying personal tax payments as business expenses is a compliance risk that attracts HMRC scrutiny.
- Borrowing To Pay Taxes Delays Financial Recovery
Every pound of interest paid on credit used for tax is a pound that could have been retained in the business or personal finances. Tax obligations are unavoidable, but financing costs are a choice. Minimising them through proactive planning and early HMRC engagement is always the better financial outcome.
Credit can bridge a short-term gap, but it never solves the underlying problem. Every risk listed above is avoidable with earlier planning and earlier communication with HMRC.
Common Misconceptions About Paying HMRC With a Credit Card
These misunderstandings are widely held and consistently lead to last-minute problems.
- I Can Pay My Self Assessment Bill With My Personal Credit Card
No, HMRC has not accepted personal credit cards since January 2018. If you arrive at the payment page expecting this option, it will not be there. Plan your payment method in advance.
- Paying Late By One Day Will Not Matter
Interest begins accruing from day one of a late payment. On large tax bills, even a few days of HMRC interest adds a meaningful cost. The 5% surcharge at 30 days adds a significant lump sum. No late payment is consequence-free.
- Hmrc Will Contact Me Before Taking Enforcement Action
HMRC typically issues reminder notices before escalating, but they are not obligated to pursue contact indefinitely. Unresponsive taxpayers with outstanding debts can find enforcement action initiated with less warning than they expected. Do not rely on HMRC to chase you.
- Setting Up A Time To Pay Arrangement Stops All Interest
A Time to Pay arrangement prevents further penalties from accruing, but interest continues to run on the outstanding balance throughout the repayment period. The arrangement reduces the overall cost but does not eliminate the interest charge entirely.
- Using A Third-Party Service To Pay By Credit Card Is The Same As Paying Hmrc Directly
Third-party payment services transfer funds to HMRC on your behalf, but the timing, reference allocation, and fee structure differ from a direct payment. Ensure the payment reaches HMRC before the deadline and that the correct payment reference is used. The responsibility for on-time payment remains yours.
Every one of these misconceptions shares the same consequence, an avoidable cost or an unexpected penalty. The simplest protection against all of them is knowing the rules before the deadline arrives.
Final Thoughts
HMRC does not accept personal credit cards, and has not since 2018. If you are planning to pay a tax bill, a bank transfer or debit card is the most straightforward route. If you cannot pay on time, a Time to Pay arrangement is almost always a better option than reaching for credit.
The costs of using credit to pay tax, whether through a corporate card surcharge, third-party service fee, or credit card interest, add up quickly. And they do nothing to resolve the underlying cash flow position that made credit feel necessary in the first place.
Plan ahead, use your payment on account schedule to spread the cost, and contact HMRC early if you are struggling. Every option available to you gets worse the longer you wait.
FAQs
Can I Pay My Self Assessment Tax Bill With A Credit Card?
No. HMRC stopped accepting personal credit cards in January 2018. You can pay by debit card, bank transfer, Direct Debit, or cheque. Corporate credit cards are accepted but carry a surcharge.
Why Did HMRC Stop Accepting Credit Cards?
HMRC removed personal credit card payments in January 2018 following EU rules banning surcharges on consumer card payments. Unable to absorb the processing costs, HMRC withdrew the option entirely.
Can I Use A Third Party To Pay HMRC with my credit card?
Yes, some third-party services accept personal credit card payments and transfer funds to HMRC on your behalf. Fees typically range from 1% to 3% of the transaction. Ensure the payment reaches HMRC before the deadline and uses the correct reference.
What Happens If I cannot Pay My Tax Bill On Time?
Contact HMRC as early as possible. You may be eligible for a Time to Pay arrangement, allowing you to spread payments across monthly instalments. Interest accrues on the outstanding balance, but penalties are reduced for taxpayers who engage proactively.
How Much Interest Does HMRC Charge On Late Payments?
HMRC charges interest at the Bank of England base rate plus 2.5% on late payments. This rate changes in line with base rate movements. A 5% surcharge also applies if payment remains outstanding 30 days after the deadline.
Is A Time To Pay Arrangement The Same As A Payment Plan?
Yes. A Time to Pay arrangement is HMRC’s instalment plan for taxpayers unable to pay in full by the deadline. For Self Assessment bills under £30,000, it can be set up online. Larger amounts require a call to HMRC’s Payment Support Service.
Can A Business Pay Its Corporation Tax With A Credit Card?
A corporate credit card can be used to pay corporation tax, but a surcharge applies. The surcharge rate is set by HMRC and is non-refundable. Bank transfer remains the most cost-effective payment method for business tax obligations.
