Taxpayers in credit card debt warning

Credit card payments can now be made for self-assessment, PAYE, corporate tax, VAT, stamp duty and some miscellaneous payments.People can now pay their tax bill by credit card in a move prompting concerns that some taxpayers could see their bills increase significantly and risk getting deep into debt.The Institute of Chartered Accountants (ICAEW) warns that allowing people to pay their tax bill by credit card could push taxpayers into financial difficulty and see them clock up expensive debts.

However, paying by card will see you face a 1.25% transaction charge or 0.91% for self-assessment tax bills paid over the telephone.Debt charities are also concerned about this new option, as it could prove too much temptation for people struggling to pay their tax bills.Anita Monteith, technical manager of the ICAEW’s tax faculty, says: “Paying by credit card is only sensible if you have the funds to clear your credit card debt before is begins to accrue interest.”