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(EDIT: This article is now out of date.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, it does not accept American Express – only Visa and Mastercard. 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 are still accepted. These cost £53.95 for a £50 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 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 Mastercard
Get 25,000 Avios for signing up and an upgrade voucher at £10,000 Read our full review
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
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