When you go to pay your tax bill what is the one payment option most self employed people want to see? The credit card of course.
Unfortunately, HMRC no longer want to make paying your tax bill easy…they want to make it difficult, by recently announcing “no credit cards allowed!”
That’s right. From January 2018 you will no longer be able to use your credit card to feed the government more of your money. Instead, they are demanding other methods of payment, such as cheque and postal order.
Are we going back to the 1980’s you might be wondering, where postal orders were all the rage and a chequebook was the one thing you always had in your pocket? Not at all, because other payment methods will also be accepted, such as debit card, cash and direct debit.
Fortunately, you can still use a credit card, just NOT a personal credit card…it has to be a business credit card.
This has left many of our nations self employed outraged though, who are arguing that they should have the right to pay any way they want to, including personal credit cards.
Not only that, but business credit cards can be difficult to get accepted for, especially if you are a contractor, freelancer, or gig worker, and as we all know, cash flow can sometimes be slightly problematic.
Come January 2018 many contractors, freelancers, and gig workers might not have the available funds to settle their tax bill, and with the absence of credit cards as an option, they would certainly encounter a difficult situation.
I reckon this could very well drive some self employed people right towards the shady world of loan sharking and payday loans. This kind of lending comes with astronomical interest rates of course, and usually, only serves to push people further into debt.
On the flip side, credit cards offer a more flexible way of lending, where you can move money around to 0% interest cards to enjoy a cheap way of borrowing money.
What makes this even more of a strange decision by HMRC is that January 2018 is also the time when credit card companies will no longer be able to slap on surcharges to transactions.
In other words, it won’t cost the government any extra cash to accept a credit card payment, which makes you wonder why they are banning it? Many people have been left bewildered.
So much so that they have taken to Facebook groups and forums to express their outrage and demand answers, although something tells me there will be nothing but silence from HMRC.
My advice to any contractor, freelancer or gig worker out there is to make sure you have enough cash in the bank to pay your tax bill next year.