Maximise your Avios, air miles and hotel points

Big news: HMRC cuts its credit card fee to 0.4% which means VERY cheap points

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One of the biggest jokes, since the EU cap on Visa and Mastercard fees came into effect in December, was that the Government itself was ignoring them.  The fee for paying your tax with a credit card actually rose in January to 1.5%.

The great news is that this move has been reversed.  HMRC is now offering ‘interchange plus’ when calculating your credit card fee.  That may sound like a very boring statement but, for many of us, it is the most exciting news to hit the miles scene in a while.

These fees apply when paying self-assessment tax, VAT, employers NIC / PAYE or any tax collected by HMRC.

For a self-employed person such as myself, this will be a fantastic miles and points generator.  I still have the BMI Platinum Mastercard which earns 2.5 Avios per £1.

I did a test on this card yesterday and the new HMRC fee is 0.386%.  This means that I will be able to ‘buy’ Avios for 0.15p each. 

I tested another couple of cards:

Marriott Rewards Mastercard – 0.374% (0.37p per Marriott point)

IHG Rewards Club Premium Visa – 0.415% (0.2p per IHG point)

Curve – 1.973%

The Curve card figure is high because this is classified as a business card and is not subject to the caps on interchange fees imposed by the EU.  Whilst high, you may still find 1.973% worth paying if you recharge your tax bill to an underlying American Express – especially if it lets you trigger a 2-4-1 voucher more quickly.

To take full advantage of this, you need a Visa or Mastercard which has a decent earnings rate.  Those are harder to find these days on free cards but some paid cards do have strong rates.

The Virgin Flying Club Black Visa, for example, earns 1 mile per £1.  Paying 0.4p per Virgin mile would be an excellent result.  The same goes for the Emirates Skywards Elite card.

The Lufthansa Miles & More Visa earns 0.75 miles per £1 – and the card is free.  You would be paying around 0.5p per mile which would allow someone with large tax bills to get themselves into the excellent Lufthansa First Class product at low cost.

The Lloyds Premier Avios Mastercard is the best Avios route if you don’t hold a legacy card.  However, at just 0.3 Avios per £1, you will still be paying just over 1p per point.  That will make sense for some people but not all.  If you are prepared to jump through the hoops required to get one, the HSBC Premier credit card at 0.5 Avios points per £1 is interesting – you would by paying around 0.8p per Avios.

The big winners here will be the self-employed or SME owners who have a legacy Visa or Mastercard with a high earnings rate.  Even without a legacy card, however, you could do very nicely by getting one of the card products above.

This is not a long term opportunity, unfortunately.  The earning rates on many Visa and Mastercard cards are unsustainable under the new EU rules and will be slashed as contracts come to an end.  For a couple of years, however, you can do very nicely …..

Want to earn more points from credit cards? – April 2024 update

If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

Get 25,000 Avios for signing up and an upgrade voucher at £10,000 Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up and an upgrade voucher at £20,000 Read our full review

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

British Airways American Express Premium Plus

25,000 Avios and the famous annual 2-4-1 voucher Read our full review

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express

40,000 bonus points and a huge range of valuable benefits – for a fee Read our full review

Virgin Atlantic Reward+ Mastercard

15,000 bonus points and 1.5 points for every £1 you spend Read our full review

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers:

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

American Express Business Platinum

40,000 points sign-up bonus and an annual £200 Amex Travel credit Read our full review

American Express Business Gold

20,000 points sign-up bonus and FREE for a year Read our full review

Capital on Tap Business Rewards Visa

Huge 30,000 points bonus until 12th May 2024 Read our full review

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.

Barclaycard Select Cashback Business Credit Card

1% cashback uncapped* on all your business spending (T&C apply) Read our full review

Category

British Airways and Avios, HSBC Premier Mastercard, IHG One Rewards, Marriott Bonvoy, Virgin Atlantic and Flying Club

Comments (84)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Tony says:
    2 Apr2 April 07:55

    I’m currently on the annual accounting VAT scheme making 9 monthly payments. These are done by a standing order – is it possible just to make these by credit card instead? If not I might go back to quarterly payments…

    • Derek says:
      2 Apr2 April 08:56

      Tony, I was the same. I called the annual accounting HMRC team and cancelled my direct debit. I now pay monthly on my Tesco debit card (0.3 avios per £).

  • Duncan Stevenson says:
    2 Apr2 April 08:29

    I may have missed something here, but I thought Curve was a business debit Mastercard? Surely that should be free with HMRC?

    How different would it be (to them) paying my CT bill compared to using my business Visa debit card?

    Given my need to earn points to simply make use of my 2-4-1 voucher, I wonder if using Curve with my BA Amex would still be worthwhile, even if it means ‘paying’ (or having the business pay) 1.3p/Avios. Mind you given the £5k limit on Curve, I won’t be able to pay my CT bill anyway.

  • dominic says:
    2 Apr2 April 08:33

    If all systems are like HMRC and see the curve as a business card rather than a prepaid mastercard debit card then it makes curve completely pointless for online purchases? i.e online systems which currently charge for credit cards but not debit cards will continue to charge if you try to use your curve?

    • Rob says:
      2 Apr2 April 09:02

      Only pointless if everyone moves to ‘interchange plus’.

      • Joe says:
        2 Apr2 April 15:43

        Is there any way round this though.

        Could you enter a different MC ‘8 digit’ BAN number when going through

        Then pay with the curve?

        Thoughts?

        • Rob says:
          2 Apr2 April 18:14

          No – the 8 digit thing is just them looking up in a table what you will be charged. The charge itself is automatic when you pay and is based on the card used.

          • Joe says:
            2 Apr2 April 20:50

            Bugger! Was worth asking.

            How about putting it through as an MC debit?

  • christian kemp says:
    2 Apr2 April 08:52

    This is very good news for me, particularly as I was about to cancel my IHG card.

    I pay approximately £50k in taxes annually, currently by direct debit. By my calculations-

    100,000 points
    25,000 points spire bonus
    Spire elite status
    Free night for spending £10k+

    I am getting all of the above for £299, which is the £99 fee plus 0.4% of £50k. Thats a pretty good deal to me, as I value a free night in a 5 star IHG hotel at £150-200, and the above is three free nights and a half roughly. I am not sure what value to give Spire status, as I have not stayed in an IHG hotel since I got the card over a year ago!

  • Derek says:
    2 Apr2 April 08:58

    Don’t forget you can also use your Tesco debit card and earn 0.3 avios per £ without a charge. You keep your clubcard points and hope for a 20% Avios bonus like last year.

  • Edd M says:
    2 Apr2 April 09:15

    Have Barclays pulled the IHG cards? There’s no signup possible on the landing page (if you Google for it), and from the main Barclaycard site it’s no longer listed:
    https://www.barclaycard.co.uk/personal/credit-cards#Rewards-cards

    • Rob says:
      2 Apr2 April 09:22

      Yes. Story to follow.

      • Kipto says:
        2 Apr2 April 09:45

        Tomorrow ?

        • Daniel says:
          2 Apr2 April 10:44

          It’s likely due to being unsustainable as a result of the new interchange rates cap. Hopefully existing cardholders don’t get shunted off it.

      • The Urbanite says:
        2 Apr2 April 11:14

        I have one, tried to apply for a Hilton (yes, I know) and got a letter saying it’s only available for new customers. Pity really.

        OT, but I’m going to Reykjavik in August. Last week, 40k HH Hilton rooms available virtually every day. Overnight, there seems to have been an enormous points hike for the entire summer period! I wonder if this is down to the new Canopy opening downtown, or is it happening in other places?

        • Rob says:
          2 Apr2 April 12:15

          Hilton reward categories operate as bands. A Cat 5 (made up example) may be ‘40,000 to 60,000’ which lets the hotel change the price whilst the category remains fixed. Bit of a con.

  • whiskerxx says:
    2 Apr2 April 09:24

    I’m curious to know how you “tested” this many different types of card without getting locked out of the HMRC payment system?
    I thought (and experienced) new rules had been introduced in January to stop this from happening?

    • Daniel says:
      2 Apr2 April 09:38

      When you enter the first 8 digits of the CC it tells you the fee. No need to make payment.

      • whiskerxx says:
        2 Apr2 April 09:43

        Thanks – I’m actually more curious to know if the multiple card route has been relaxed, and guess you would need to actually make the payments to find that out.

  • TomTom says:
    2 Apr2 April 09:43

    Raffles – which is the best cc for star of sky team earning?

    • TomTom says:
      2 Apr2 April 09:44

      Or

    • Rob says:
      2 Apr2 April 10:31

      Under Favourites is a link to an article on the best Star credit cards.

      No SkyTeam members have UK cards so you are reliant on Amex MR or SPG Amex transfers.

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