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How to indirectly pay your January tax bill with an American Express card

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If you are self-employed or pay tax outside PAYE for other reasons, 31st January is the day that you will need to make your final tax payment for the 2013-2014 tax year.

(EDIT:  This article is now out of date.  Please click here to read our 2020 article on cunning ways of paying your HMRC tax bills with an American Express, Visa or Mastercard.)

HMRC accepts credit cards for tax payment. However, they do not accept American Express – only Visa and MasterCard. And there is a 1.4% fee for the privilege.

To be honest, no current Visa or MasterCard products have a generous enough reward scheme to justify paying 1.4%. I have the old BMI MasterCard which earns 2.5 Avios per £1, so that is OK – I am effectively buying Avios points for 0.56p.

The ONLY justification for using a Visa or MasterCard would be to hit a spending target.  The IHG Rewards Club Premium Visa offers a free night when you spend £10,000 on their card whilst the Hilton Visa gives you Hilton Gold status for spending £10,000.  Either of these may justify a £140 fee to HMRC, especially as you will also earn some IHG or Hilton points as well.

There is one way around this, although it is very fiddly except for small amounts.

3V Virtual Visa gift cards, available from Tesco, are no longer accepted by the Revenue. However, the ‘premium’ prepaid Visa cards sold in Tesco – see the image below – are still accepted. These cost £53.95 for a £50 card.

Visa gift card

The maths would work like this:

You buy £1,000 of premium Visa cards at Tesco for £1,079, paying with your American Express.

(Do not buy more than four per transaction, though, as the Tesco tills tend to throw a wobbly beyond that.)

Tesco gives 150 bonus Clubcard points for every £50 of giftcards you buy. This means you receive 3,000 Clubcard points (7,200 Avios) which offsets the £79.

You would also get points on your Amex credit card from the spending, and it would count towards any sign-up bonus and / or your BA Amex 2-4-1 voucher. If you use an American Express Preferred Rewards Gold, you would earn 2 Amex points per £1 as supermarket spend earns double points.

You can then redeem the Visa gift cards via the HMRC website – only do a few at a time, though, or it locks you out. They are treated as debit cards so there is no additional fee.

Assuming you used an Amex Gold and are in your first year of membership (and so getting double points at supermarkets) buying £1,000 of the premium gift cards would generate:

3,000 Clubcard points from the gift card promotion (7,200 Avios)

2,160 Amex Membership Rewards points (2,160 Avios)

That is 9,160 Avios for £79 plus quite a bit of running around.  It is an acceptable deal but not one that I will be rushing to use.  However, if you have a spending target to hit on a new American Express card then it is a different matter altogether.

This strategy will not necessarily work for everyone, but it is worth thinking about.  You may also want to consider the IHG or Hilton cards – you still have enough time to apply and receive the card before the end of the month.

(Want to earn more Avios?  Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

Comments (83)

  • erico1875 says:

    If you can GENUINLY use the Club Card points on something that is 3 for 1, ie hotel bookings, Goldsmiths, Storage, eating out etc, then the £3.95 fee is actually turning a small profit.(£4.50/£3.95) so the Amex points and/or 2 for 1 really is FREE.
    Use with money off/helping hand vouchers for free food.

    • Jason says:

      You also get 4p a litre off fuel for every £100( until end of feb) spent so makes the savings even better depending on the size of tank.

  • oyster says:

    Except Tesco now only seem to stock the £25 versions of this card which has £5.90 worth of fees per £50.

    And aren’t you limited to £2k a year?

    • sandgrounder says:

      Have a good look at all the cards. Some cheepy chappy or chapette near me plays mean and hides the 50s at the back of the 25s every time they restock!

  • What's the Point says:

    Just don’t register them on the Visa website to avoid the £2k limit. You can use them online with out registering them.
    Availability of the £50 Visa cards in Tesco is not great – the recent Cake Magazine rush has wiped a lot out, and many haven’t restocked.

    • oyster says:

      What name do you use if you don’t register the card?

    • Jason says:

      I bought 10 £50 cards yesterday. I also bought 6, from argos, in the recent amex offer, one didn’t register through foursquare but the other 5 did. I rang amex and they manually credited the £25 without question. Amex customer service are brilliant.
      If I had as many miles as raffles I wouldn’t be buying them, but only travel for leisure so any way to collect Avios cheaply is welcome.

  • Britbronco22 says:

    If you can use helping hand vouchers when buying the cards then it really works out well. Hopefully they do a round of this before 31/1

  • mark2 says:

    There is a very important element of the arithmetic which has been omitted i.e. FuelSave. If you spend £1000 you will receive 40p off per litre (split across at least two fills). If you buy 50 litres per fill this will give another £20 towards the cost.

    Of course, if you had thought ahead you could have bought the cards with cake vouchers and snagged another 2,000 points i.e. 4,800 Avios.

    • Jason says:

      What was the cake voucher deal? Has it finished?

      • mark2 says:

        In the Tesco Christmas magazine there was a voucher for 100 extra points on gift cards. The magazines were distributed at different times to different stores and went quickly. Some people managed to get lots. The coupons expired on 31 Dec. The gift cards were also often in short supply esp. 3V.

    • Rob says:

      Good point. As I don’t run a car in London I tend to forget about this.

    • grex9101 says:

      I thought fuelsave had finished/was finishing?

  • Owen Rudge says:

    I made use of the 3V vouchers last year to pay some of my tax bill, before the plug was pulled on it – resulted in quite a long statement from HMRC showing lots of £25 payments though!

  • Freddy Scott says:

    It is still theft by deception why?

    • Richard says:

      I’ve got into fights here by saying things like that in the past, but in this case I can’t see anything remotely deceptive about it. You’re just buying a gift card and using it in the intended way. The transaction must make sense to both 3V and Tesco, otherwise they wouldn’t offer it – it’s not as though you’re exploiting some loophole they’ve missed.

      I suppose HMRC have to pay a few extra pence in multiple transaction charges, but it *is* just pence – and if you’re paying the right amount of tax and paying it on time, then I’d say that makes you one of the good guys.

    • Andrew says:

      What? That makes no sense

    • Peer Net says:

      You are earning points because your using gift cards to pay a bill, just because its not something the masses do doesn’t make it wrong, it helps nobody by using scaremongering tactics

  • d4ve says:

    I successfully did this in Dec using the £50 cards and clearing £1k of my bill. Used some cake vouchers and just went straight the the HMRC site to fulfil. No pre registering and all details in my name. Worked a treat.