This is big news for UK freelancers.
From 13th January 2018, HMRC will no longer allow you to use a personal credit card to pay your Self Assessment tax return.
We know we should have it saved away - yeah, but life doesn't always work that way. For the first couple of years of being freelance - the ability to pay that bill on a 0% credit card saved me. That option is being yanked away.
The following article is meant to help.
I'm totally not a financial expert - always best speaking to HMRC or your accountant.
What should I do?
- Don't panic
- Get your s... in order. First up if you've not already done it submit your SA tax return for 16-17 sooner rather than later. That way you will know for sure what you owe
- If you don't have enough saved, you can still pay the bill BEFORE 13th January 2018 on a personal credit card (getting a 0% card clearly the best plan)
- Did you get that? You can still do it for 2018 - just don't leave it too late. Then plan ahead for 2019 (see below)
- Remember - you can make multiple payments - so for example one on a debit card from the money you've saved and one on a personal credit card (before 13/1/18)
- If you think you'll struggle to pay, call HMRC now - don't wait until January when everybody is calling (unless you really love their on-hold music). Make plans now
- Christmas is coming up - genuinely think about your spending for it, nothing is worth the dread of a financial hangover come December 27th
- If you really can't pay your bill, HMRC can help you by letting you pay with installments. You need to discuss this with them - be fully prepared for the call - check out what you need ahead on this link
- As far as I can see, you can still pay the bill after 13th January 2018 using a business credit card. These aren't that easy to get but may be worth a go if you have a business account. Remember though, paying on credit cards is an expensive form of borrowing. Speaking to HMRC about installments or even getting a loan may be a better option. Consider all options.
Plan for 2019's bill
- Make sure it doesn't happen again next year, by saving your tax as you get paid into a separate account
- If you think it will help you - you can set up regular payments with HMRC (see here) with their 'Budget Payment Plan' - so you can pay regularly be it weekly or monthly and if you're worried 'what if I have a short month?' it's pretty good - it lets you take payment holidays. It's there to help, not hinder.
- One of the best things I did was realise I could submit my Self Assessment tax return in July/Aug etc, ie not long after the tax year finishes. Doing it early (way ahead of the following Jan 31 deadline) means you're fully prepared for what you owe for that next January deadline and can sort your saving/spending accordingly
Remember - don't panic, just control what you can.
Speak to people and get help where you need to.
When you're in control you feel so much better about these things.
HMRC's website about paying your SA Tax Return is pretty helpful. Not pretty. But pretty helpful. It's at https://www.gov.uk/pay-self-assessment-tax-bill
And one final thing - Frankie at the wonderful Doing It For The Kids blog/community suggested we should contact our MPs about this issue. It's a good point. If enough people point out the pain it can cause, it could make a difference. You can also contact IPSE who represent the self-employed to the Government here in the UK. Encourage them to raise the issue as well.