Contractors hit with hike in tax payment costs

Contractors using the telephone to settle their tax bills are set to be hit by a hike in the cost of their card transactions, it has been reported.

Previously, people wishing to pay off their bills via HM Revenue & Customs' (HMRC's) telephone service have been charged a 0.91 per cent handling fee for using a credit card.

However, this amount has been increased this year to 1.25 per cent, which means that contractors who intend on making their payments in this way will be hit with higher costs.

Card issuers charge an interchange fee on credit cards that is then passed on to HMRC, which in turn imposes it on customers, a spokesman for the tax body told the Western Mail.

"HMRC is making neither a profit nor a loss but simply covering its fee costs," the source added.

This news comes after Anita Montieff of the Institute of Chartered Accountants in England and Wales told the Telegraph that HMRC faces a surge in the number of people applying to defer their payments due to the economic climate.

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