Credit Card Question/Problem - paying tax

wynd

Hi all, first post but used this site for a while.

I have a question related to the use of interest free purchase offers on credit cards that I can't seem to find an answer for. Boyfriend is partly self employed and received letter from HMRC regarding miscalculations with his income tax which turned out to be correct, leaving him with a £3000 debt to pay.

They said the interest they charge on this will amount to £100 a month and we can only afford to pay it back fairly slowly, at least over a year as the amount stands, considerably longer with the interest. One of their advisors suggested we pay it off with a interest free offer on a credit card, leaving us with 15 months to save and pay off as much as possible within that time.

Neither of us have a credit card, (I've had them in the past but paid off the balance and eventually closed my account) but as he had good credit my boyfriend decided to apply for the M+S credit card with 15 months free interest on purchases. Further down the line another advisor we spoke to at the HMRC said that was a bad idea as the credit card company could class the payment as a cash withdrawal and leave us in a worse position in terms of interest.

Does anyone have any experience of paying a tax bill with a credit card to use one of the 'interest free' offers? Any advice as to how to proceed? Having children and living on pretty meager outgoings already means it would be hard to cut back further to pay it off quicker!

wynd

I have tried reading credit card T+C but still unclear!


‘Purchase’: any transaction under which payment for goods and/or
services is made by use of the Card and/or Card security details"

‘Cash Advance(s)’: any cash withdrawal, purchase of travellers’
cheques or foreign currency, (other than from Marks and Spencer plc),
Cheque transaction, money order or electronic money transfer
(excluding Balance Transfers), any payment by Direct Debit and any
betting and gambling transaction'

would billpay be classed as direct debit?

Tixy

No, it will be down as a purchase.

As an aside - are you sure £100/month interest on a £3k debt is correct? I would expect it to be far far less than this.

noh

Tixy wrote: »

No, it will be down as a purchase.

As an aside - are you sure £100/month interest on a £3k debt is correct? I would expect it to be far far less than this.

Yes more like £100 for the year if the interest rate is 3.0% as indicated here:-

http://www.hmrc.gov.uk/rates/interest-late-pay.htm

wynd

This could be my BF being extremely panicky (he freaks out, never had any kind of debt before) and mishearing the details. £100 for the year is much less frightening! Tixy is this from experience? do you have a link to any info?

Thanks for that, thats made my afternoon much less stressful!

jonesMUFCforever

Will HMRC accept payment by credit card?
If they do will they charge a fee (3%? so an extra £90 on £3000)?