Earning Avios on your Self-Assessment, PAYE or Corporation Tax bills
Savvy points earners look for any opportunity to put spend through a credit card and earn points, but HMRC aren’t big fans of American Express. In fact, they don’t allow it at all. There are some sneaky ways to get around this, but the bigger question is – is it worth it?
What type of taxes does this article cover?
I’m using “taxes” as a blanket term for payments to HMRC. That could be your personal self-assesment payments (including payments on account) or your business taxes like your PAYE or annual corporation tax.
It’s important to note that I am neither an accountant or a tax expert. If in doubt, speak to one.
The first key point is that HMRC do not allow payments via an Amex card, whether that’s a personal card or a business card.
If HMRC doesn’t accept Amex, what can you do?
The obvious choice is to use a Visa or Mastercard.
- For business users, the only non-Amex points earning credit card is the Capital On Tap card. There is a free version of this card.
- For personal users, there’s the Barclaycard Avios and Avios Plus card.
However, HMRC no longer accepts personal credit cards for payment. That closes the door on the Barclaycard Avios cards.
You can still pay HMRC using certain Visa or Mastercards if they are registered to a business. There’s a catch, though.
HMRC will levy a “surcharge amount” if you try to pay them using an accepted corporate credit card. There is no fee if you pay via a direct debit or from your bank account. The fee is equivalent to 1.85% of the total payment.
This surcharge means that paying HMRC using your Capital On Tap card is about double the absolute cheapest method (the Avios Boost function) of buying those Avios.
HMRC Fees for using a corporate credit card
| Payment to HMRC | HMRC Surcharge | Points / Avios Earned** | Cost To Buy Those Avios* |
|---|---|---|---|
| £1,000 | £18.50 | 1,000 | £9.20 |
| £10,000 | £185 | 10,000 | £92 |
| £20,000 | £370 | 20,000 | £184 |
**Assuming you earn 1 points for every £1 spent
What if you really wanted to use your Amex?
There are third-party platforms that can act as middlemen in a card transaction. They present to an organisation, such as HMRC, as a card type that they accept. They then allow you use your Amex on the other side.
Over the years these platforms have come and gone. The biggest issue with these platforms is that they don’t do this for free. That fee means that you are paying for the privilege of earning Avios points, and often it would be cheaper to just buy the Avios outright.
Curve used to offer this service for free. If the transaction was over a certain amount they would add fees on but these were pretty reasonable. This is no longer possible.
Bluechain used to work with SMEs. Now they’re only available to companies with over ten staff and greater than £2m turnover. They charge 2.3% to pay a bill via an Amex card, which will eat up any value you’d get from earning Amex Membership Reward points or Avios.
Capital On Tap’s Bill Pay service
Capital On Tap recently launched a service that allows you to pay any bill using your agreed line of credit. Their fees are quoted as being either “as low as 1%” or a “2% flat fee”. You can earn 1% cashback on the payment, or if you’re on their Pro plan, you can earn 1.25% to mitigate that fee. There should be no HMRC surcharge using this service.
You will have to choose whether to earn the 1 to 1.25% cashback or points; you cannot earn both. That means you’ll be paying a 2% fee in total.
Assuming that 2% flat fee is what you pay, the cost of the Avios will look like this:
| Payment to HMRC | Capital On Tap Fee | Avios Points Earned** | Cost To Buy Those Avios* |
|---|---|---|---|
| £1,000 | £20 | 1,000 | £9.20 |
| £10,000 | £200 | 10,000 | £92 |
| £20,000 | £400 | 20,000 | £184 |
**You earn Capital On Tap points, and these transfer at a 1:1 ratio to Avios
The table above shows that it is far cheaper to buy the Avios outright rather than pay an HMRC bill through COT.
This service is in beta but it appears that anyone with a Capital On Tap card can activate it.
Conclusion: Paying HMRC via credit card
Can you go too far with a points-earning strategy?
I used to put PAYE payments through Capital On Tap to earn points. In the end I stopped it because of the additional fees, plus it’s a time consuming process each month. I’m in a position where I make thirty to forty thousand points every month, so adding another 15k each month via an HMRC payment wasn’t needed or efficient.
If you’re thinking of using any of the methods above to earn more points through your HMRC payments, it’s worth considering the true cost and whether it would be more sensible to buy the points outright.
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