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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(EDIT:  This article is now out of date.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)

  • Mandy H says:

    Be a very long HMRC statement if we used this method to pay hubby’s tax bill … not a boast unfortunately!

  • Pascal says:

    Oh I paid them £3500 last week, should have waited 🙁

    • whiskerxx says:

      there is nothing to stop you using this methodology all year round, except that you deposit the Visa card into your own NS&I account rather than to HMRC

  • TJ says:

    I’ve been paying a corp tax bill using this method over the last couple of months. I’ve done about £5k this way and I’m waiting until January 21st now to avoid going over 30k points and having them confiscated.

    Agree with the above points, RE fuelsave – I go through about 100l of fuel every week so for me the avios have come even cheaper than outlined above.

    So, after a couple of months, here are some tips:

    If you buy loads at once the tills tend to crash. If you get somebody friendly on the till ask them to press the total button after they’ve put a couple in. It runs the validation comms when they press this and if they try and do more than 5 at once it tends to crash.

    Second tip – there is a magstripe on the packaging – most till staff don’t know they can use this rather than having to open up the card packaging to scan the barcode. This will save you a bit of time and embarrassment in holding up a queue!

    Third tip – if you’re pretty technically capable get a plugin called iMacros in chrome. All of the cards seems to have the same first 8 characters and the same expiry date of 11/17 – if you get imacros it can fill in nearly all of the info for you, and you add the final 8 characters and the CVV

    I also write the conf code for each transaction on the card in sharpie so I know how they match up.

    • Jason says:

      TJ

      I’m doing the same, but I just cut and paste the first 8 digits. I did 10 this morning in about 5 mins.
      Do they need to swipe the magnetic strip on the till?

      • TJ says:

        Hi Jason, yeah the magstripe can be swiped on the side of the monitor instead of them having to pick off the card strip on the back. As I’m sure you’ve found the card is glued from 2 sides so it takes them a while!

        At first I felt a bit cocky telling them how to do their job but the till staff mostly seem appreciative!

        • Jason says:

          It takes ages to rip the paper off:-( it never runs along the perforated edge!!!!!
          Not helped by the fact, yesterday, I did 5 £25 cards to start with oops!!!
          Thanks for the tip, it should make buying them a lot easier.

        • Erico1875 says:

          I use the corner of the Amex card to open the tear off strip. All done b4 served at till

      • SpottedDick says:

        How can you pay a company tax bill with this method? How can you account for this?

        • Rob says:

          I assume the fee is an allowable deduction, as would be the stamp and bank charge if you posted a cheque.

          • Richard says:

            Financial fees are allowable in normal circumstances, but the fact that you’re incurring this one solely to gain a personal benefit might raise eyebrows (if you were ever investigated). The amounts involved are small, but the worry would be that if HMRC finds one thing they think is shady, they’ll assume there are others and waste a lot of your time going over your accounts in fine detail.

            I’d respectfully suggest it’s a whole lot safer to assume the fee is disallowable, and ideally to pay the fee yourself so that only the actual amount paid to HMRC goes through the company. Even better, ask an accountant 😉

          • Dee J says:

            Yes agree with this as the fee is effectively buying you the points for personal benefit.

          • Rob says:

            No it isn’t. The fee is the fee. The fee is paid with ANY credit card – and most credit cards don’t give points.

          • Dee J says:

            Think the 2 fees are getting confused here, I was referring to the activiation fee from purchasing the cards as opposed to the fee for using the card, as by purchasing the card it incurs the £3.95 activation fee and the only benefit as opposed to paying direct is the points.

          • Brendan says:

            Yes, OP seems to be referring to the fee paying cards, not 3vs. Don’t know how he can make that work with the fee.

          • Dee J says:

            The other fee being the one charged by HMRC when paying by card.

    • Andrew says:

      Am i the only one that bought a barcode scanner? 🙂

    • Dee J says:

      Yes wondering how you would account for this also as the added fees must mount up quite quickly

  • Brendan says:

    Hi Rob

    Sent you an email about an Amex referral just in case you didn’t see it!

  • amh says:

    Does this work for any HRMC payments like VAT, Corp Tax?
    Its almost like getting a free return flight each year if so

    • erico1875 says:

      And if your council doesn’t accept 3Vs, mine, West Lothian, doesn’t, then these are handy for running your council tax thru Amex too

  • avidsaver says:

    Does anyone know if Tesco still stock 3V cards? My local always had a great stock until just before Xmas – since then nothing 🙁
    I spoke to the girl re-stocking the gift cards and she thought they may have been dropped by Tesco.

  • Paul says:

    Whilst I’m not suggesting this *is* dodgy, might the act of putting through a large volume of small payments, all against different cards not look pretty dodgy to HMRC, and trigger some sort of follow-up investigation? I’m not suggesting it wouldn’t all check out as fine, but sounds like it has the potential to be a hassle…

    • Louie says:

      I don’t know the exact figure, but I probably paid over £10k to HMRC using 3V cards before they stopped taking them. Not a peep out of HMRC.

    • Dee J says:

      I can’t see it being dodgy as they will be happy to receive the money and not question why your paying how your paying.

  • What's the Point says:

    I wish I had paid both our balancing payments when they still took 3Vs back in 2013!