Loophole is on the cards
Car tax fees query reveals credit charge difference between paying with personal or business account
QI TRIED yesterday to pay my car tax at Post Office by credit card. I was told that there would be a charge.
My brother said that companies are not allowed to charge anymore. I tried looking online for an answer but saw conflicting advice. Could you please advise? Linda Stewart, Kirkintilloch
AINTERESTINGLY, I was online paying some car tax when I read your email and, like you, I was confused when I saw on the DVLA website that they were making an extra charge for some credit card payments. Like your brother I understood that companies were not allowed to charge extra when customers paid by credit card. Legislation has been in force since January last year that outlawed surcharges when customers paid by credit card and this should have meant that you weren’t charged any extra when you taxed your car. I spoke to the Post Office and they came back to me very quickly, saying: “This enquiry is definitely for DVLA. The charge comes from them direct when a customer pays for car tax using a credit card.” I then spoke to DVLA and their response was: “As advised, there is no charge for using a consumer credit card or a debit card. A charge will be applied if a commercial credit card is used.
“We must recover the cost of providing this payment option through the fee – this has always been the case for commercial credit card users. We inform customers of the fee upfront, as well as there being numerous alternative ways of paying vehicle tax which do not attract a fee.”
The issue seems to be that your brother is correct when he says that companies are not allowed to charge more when customers pay by credit card but it seems that a loophole in the law means that this only applies when you use a personal credit card.
If you use a corporate card – that is one that issued to a company, what the DVLA calls a “commercial” card in the response above – then it is still possible and allowable for retailers to charge a fee.
The fee should be proportionate and should represent the amount that it costs to process the transaction, which is what DVLA seems to be saying. And, as far as I can see from their website, it is, since the extra charge for non-personal credit card is £2.50.
I haven’t seen the form you
completed at the Post Office to check how clear they make the extra payment but, on the DVLA website, when you get to the payment page, there is a very clear warning that states: “There is no fee for paying with any debit card, pre-paid card or personal credit card. An additional fee of £2.50 is applicable to all other types of cards.”
I’m not sure why this distinction was made when the legislation was introduced last year but it is certainly worth making sure that you use a personal card in future.
It’s also worth making the point that it’s the card you use that triggers that payment, not whether you have a business. So, even if you are a business owner and you have a company credit card, you could still avoid the payment if you use your personal credit card when taxing your car in future.
The concern when this legislation was introduced was that it would lead to a rise in the price of many goods and services since businesses would just try to get back the charges they had previously been adding at the point of sale to credit card purchases.
They would do this by increasing the price of goods across the board, so that customers who were not using credit cards would have faced an increase in the cost of the things they were buying.
There is no solid evidence to suggest that this has happened and I think most people welcome the abolition of these charges.
There was evidence in the early days that some retailers were trying to bypass the rules and were still adding fees when credit cards were being used but this seems to have pretty much died away now, unless any of you have any evidence to the contrary?
Remember, it is still lawful to add booking and admin fees as long as they are added to all payment options and not just credit cards.