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(EDIT:  This article is now out of date.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

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Comments (83)

  • Charlie Alpha Mike says:

    The headline could equally well as read “How to indirectly pay your January tax bill with a Mastercard/Visa/Diners Club card !

  • Daryl says:

    Sorry can someone clarify for me how I use them to pay tax bill, I’m assuming it’s through the hmrc santander pqy website, do I just do lots of transactions using my tax reference number and the cards?

  • What's the Point says:

    Daryl – correct, lots of small payment I am afraid with your UTR on the HMRC web page for payments.

  • Daryl says:

    I’m also assuming I could pay part with these cards and part with my normal debit card

    • Rob says:

      Yes, you can make as many payments as you want – just limited to four per day it seems.

      • TJ says:

        I don’t think you are limited to 4 per day, I put these through in bigger batches than that

        • daryl richards says:

          sorry to be a pain
          so essentially i dont ahve to pay them all at once, ie i can start paying them in today and pay in a few each week up until the deadline?

        • Dee J says:

          I think the 4 is meant for when you are purchasing them from Tesco, as any more can cause issues.

          Once I tried to buy 10 and then only 1 went through which meant I didn’t get the bonus points, and then somehow ity wasn’t activated even though I had a activation receipt, lots of hassle!

  • Melvin says:

    Sorry if this is not most appropriate place for this question however…

    …In the next week or so I will be paying off the balance of £25k on a new car at a Ford dealership. They do not accept Amex and charge 2% on Visa. This is typically the second biggest purchase aside from a house. Surely there is some way I can earn avios or something?

    Can anyone suggest what I can do if anything?

    Note: I have a Amex gold rewards card within the first year, an IHG Rewards visa and various debit cards.

    • TJ says:

      I don’t think there’s an easy way unfortunately. Somebody else might know of one. It’s a bit cheeky for such a large company to pass the card charges on to you like that!

      • Alan says:

        Sadly I think all car dealers do it as they know otherwise (all sensible) folk would be giving them their Amexes to get oodles of points! They’re just not willing to absorb the card fee into their margin – although normally are OK with it for the deposit and of course for servicing work!

  • Daryl says:

    I’m trying to book 2 f or club tickets to muc for September, I was going to bite the bullet and just get the pe seats that were available but someone on another forum said they areclikely to release more seats after this sale is finished so hold on I may get lucky – does anyone else think this likely? Daryl

  • Omar says:

    When you buy these visa cards in Tesco, doesn’t Amex charge a cash transaction fee? and from what I know a cash transaction doesn’t accrue any points. If so many of you have tried it I assume it is not classed as a cash transaction.

    • Charlie says:

      No cash transaction fees, they’re just treated as per any other grocery purchase along with yer beans and spuds!

  • Andi Hawes says:

    I just paid my tax bill with my Mastercard. i needed to pay £6,000 but my Lloyds Premier Rewards Avios card was given a ridiculous £3000 limit. I had discussed with friends and the bank itself whether i could pre pay my Credit card with £3000 so its balance was plus £3000 and then pay the £6000 charge. No one seemed to know. the bank themselves werent sure but assured me that the £3000 limit was also a payment limit so any one payment cannot also be over £3000. It worked. Once id paid in my £3000 my account showed in credit, i then paid 2 payments of £3000.