Got an SME? American Express will pay your wage bill, HMRC and rent for a fee and give you points

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American Express has launched an interesting new service, the Premium Rewards programme, for anyone running their own business.

It is a little like Billhop, but cheaper. What is odd about it is that at no point does any money pass through your card!

Premium Rewards can be used to pay, and I quote:

PAYE

HMRC

Non-accepting merchant and supplier payments

Where your current credit limits are restricting you

Rental fees and business rates

American Express Premium Rewards

Put very simply, this is how it works:

You go online and tell American Express where it should send money, and how much

American Express takes the money directly from your bank account

American Express makes the payment

American Express charges you a fee of between 1% and 1.25%

You earn 1 Membership Rewards point per £1 sent

And the point of Premium Rewards is …..?!

I know what you’re thinking – why would anyone want to do this?

Fundamentally, you are paying American Express 1% to 1.25% to do something that you could just as easily do yourself. There aren’t even any cashflow advantages as American Express takes the money off you immediately.

All you are doing, in effect, is buying Membership Rewards points for between 1p and 1.25p each.

But HfP says that Membership Rewards points aren’t worth more than 1p?

That’s true. If you look at our article on ‘What is a Membership Rewards point worth?‘, you will see that it isn’t easy to get more than 1p for them. In most cases they are worth substantially less.

Only airline miles, and potentially Radisson Rewards transfers, get you 1p or more of value. Even then, you need to know how to redeem those airline miles strategically to get over 1p.

If I can’t get more than 1p per Amex point, why would I want to pay 1.25p?

It’s a tax arbitrage, that’s why. This is the genius of the American Express Premium Rewards programme.

My marginal tax rate on HfP is roughly 50% including National Insurance. This means that any cost I can charge to the company is reduced by 50%, since the cost reduces my profits by an equivalent amount.

Let’s look at the maths from the point of view of a small business owner:

You pay American Express Premium Rewards £230 to pay your £20,000 quarterly VAT bill

The £230 is a business expense and so is charged to the company. It reduces taxable profits by £230 which, for someone paying a 50% combined tax and NI rate, means the real cost to the company owner is only £115.

The company owner receives 20,000 Membership Rewards points

If these were transferred to Avios, the company owner has ‘bought’ 20,000 Avios (1:1 transfer rate with Membership Rewards) for £115. This is an exceptional deal.

Note that only some payment fees can be written off against tax. VAT is fine, as are payroll and employee NI costs, as these are payments made by company itself. Corporation Tax would also be fine.

You couldn’t write off the cost of paying HMRC your self-assessment bill for self-employment or company dividends, because those are personal payments.

What does American Express Premium Rewards charge?

The fees are on a sliding scale:

Payment under £10,000 – 1.25%

Payment of £10,001 – £100,000 – 1.15%

Payment of £100,000+ – 1%

Payments can be batched to reduce the fee. If you want to pay your staff using Premium Rewards, for example, the 1.15% band would apply if the combined total sent on payday was over £10,000.

American Express Premium Rewards 2

What American Express cards can be used with Premium Rewards?

The exact wording is:

Your card must be issued in the UK

Your card cannot be a Cashback card

Your card cannot be a co-branded card

The 2nd and 3rd points make no sense, because Premium Rewards only issues Membership Rewards points and so you obviously can’t link it to cashback, co-brand or indeed any other card which doesn’t issue Membership Rewards points.

American Express seems happy to credit the points to a personal Membership Rewards card account but the payments for the service need to be made by a business and – in theory – Premium Rewards should only be used for business payments.

Is Amex Premium Rewards worthwhile?

For some HFP readers who run small or medium sized businesses, the Amex Premium Rewards programme will be an outstanding opportunity. It is especially good for anyone paying six figure bills on a regular basis, since you would benefit from the lowest 1% fee band.

You also need to be paying a high level of personal tax in order to make the tax arbitrage work.

Is it worth paying 1.25% to pay a £5,000 bill (£62.50 fee) if your marginal tax and NI rate is only 30%? Just about. You are paying (£62.50 – 30%) / 500000 = 0.875p per Membership Rewards point. 0.875p per Avios certainly isn’t bad.

Is it worth paying 1% to pay a £100,000 bill (£1,000 fee) if your marginal tax and NI rate is 50%? Absolutely. You are paying (£1,000 – 50%) / 10000000 = 0.5p per Membership Rewards points. 0.5p per Avios, or whatever you choose to use them for, is a great deal.

Owners of smaller businesses should look at Curve Metal. Curve Metal has a £180 annual fee and allows you to charge £50,000 per year of HMRC payments to any Visa or Mastercard you wish, for free. This is just 0.36p per £1, which could mean very cheap miles or points if you linked it to a suitably generous Visa or Mastercard. This HFP article explains how Curve works.

There is also Billhop. Billhop works slightly differently to American Express Premium Rewards. It allows you to pay any bill with an American Express card in return for a 2.95% fee. Billhop makes the payment via bank transfer and recharges your American Express card, coding it as a purchase. The snag here is the 2.95% fee. It means that Billhop only really makes sense if you want to trigger an Amex sign-up bonus or your British Airways American Express 2-4-1 voucher. You can learn more about Billhop here.

How do I sign up for Amex Premium Rewards?

There is no online sign-up service. You can download the two Premium Rewards brochures (PDF) here and here. These include a form that you can send in, or alternatively you can call to register.

This is a new service and I have zero feedback so far from users. If you sign up, let us know how it goes.

Want to earn more points from credit cards? – December 2021 update

If you are looking to apply for a new credit or charge card, here are our November 2021 recommendations based on the current sign-up bonus.

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the top current deals:

British Airways BA Amex American Express card

British Airways American Express

5,000 Avios for signing up, no annual fee and an Economy 2-4-1 voucher for spending ….. Read our full review

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee 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.

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

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

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company 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 Credit Card

1% cashback and no annual fee Read our full review

Category

American Express Membership Rewards

This article is closed to new posts. Discussion continues in the HfP Forums.

Sandgrounder says:

3 Aug3 August 07:30

This is an interesting scheme. Although the fees do appear to be a business expense, you can nominate a personal card to receive the reward. The personal card is not used for the transaction at all. There is no way to earn points in this scheme as an individual, it is open to businesses only. Does it meet the test as not being provided by reason of employment? It’s a little close to the wind, I’d love to see it at tribunal, it would make for an interesting case.
- Rob says:
  
  3 Aug3 August 08:37
  
  You forget a key point. ALL purchases via Amex Business charge cards give rewards to a PERSONAL MR account. A company is not allowed to have a MR account. It is therefore exactly the same point of law as Amex has been using for the last 30-40 years to give MR points on its business cards.
  - Sandgrounder says:
    
    3 Aug3 August 16:58
    
    This feels different to even cards provided by the business for use by an employee for ad-hoc purchases. This will likely never benefit the employee making the transaction, only the business owner who puts their number on the application form. Scale it up, if I offer a payment scheme and give you 45 loyalty points per pound in exchange for a 50% fee, each point exchangeable for 1p, is that still ok? Sounds like an avoidance scheme. And you are certainly marketing this as such! Given the small percentage taken, it will quite possibly never be challenged. But it would be interesting if it was, for those who find such things interesting of course.
EwanG says:

3 Aug3 August 07:38

Re the Curve Metal example. It’s £150 for a year if you pay up front or you’d be charged £180 if paying monthly.
AndyF says:

3 Aug3 August 07:51

Quite interesting i’d consider this to help hit the sign up bonus when taking out a AMEX business card in the future.
- AndyF says:
  
  3 Aug3 August 07:53
  
  It also feels like a direct response to the Curve Card and HMRC payments.
- Ian M says:
  
  3 Aug3 August 07:55
  
  Spend through the Amex Premium Service does not go through your card, so wouldn’t help you hit a sign up bonus.
- Waddle says:
  
  3 Aug3 August 07:56
  
  I don’t think this will help with sign-up bonuses or spending targets as the money goes straight from your bank account to the recieving account. You get MR points to your card but there is no spending taking place on the card.
Jonathan says:

3 Aug3 August 07:55

I’ve used this service, and the concept it brilliant but a few things I noticed.

1. During the signup process, there is the basic form above you need to complete and return. There is a also a more detailed online application form that Amex will send you to sign up with. Account creation is relatively quick, only 1-2 days. Amex will walk you through the first payment run.

2. The portal to process payments is slightly complicated namely due to it thinking you want to do fx transactions. The portal is also not a clean and crisp as the main Amex website. Those that have used BillHop before, BillHop has a more simpler and intuitive interface.

3. You have 2 options of paying Amex, one is direct debit and the other is by bank transfer. In theory this service from Amex does not provide you any credit facility so Amex needs cleared funds before making the payments for you but on the direct debit option you seem to have a day or twos grace. I mean I could set the payment day to be tomorrow but clearly the direct debit won’t leave my bank until Thursday so I guess there is a small credit facility there.

4. On the direct debit option, payments from the bank reflect the payment run you made in Amex with the fees. For example if you made 100 x £1000 payments you would see 100 x £1010 transactions on your bank statement.

5. For my SME I can easily put around £20k through per month and benefit from the mid tier fee structure but all payments would have to be batched together meaning one suppliers will be paid early and some late. Again you can set the date of each payment within the batch over 2-3 days but this doesn’t really benefit much. If you have full time accounts staff they might be more on top of this than me currently, I’m trying to change my payment process to fit the fee structure so I benefit better.

Oh and another recommendation from the Amex rep is to pay your monthly card statement via this service to boost your points earning potential which I will consider but haven’t done yet…
- Ian M says:
  
  3 Aug3 August 08:03
  
  Hi Jonathan,
  
  I already use the Amex international payments for all my business FX transfers. My Amex rep has been mentioning this premium service for a while but I’ve not signed up as yet. One question you might know the answer to.. If I was to sign up for this service, would I have the choice of when I wanted to use the premium service and when I wanted to use the normal standard FX service?
  
  For instance, if I have a supplier invoice to pay for over 115,000 EUR (i.e. over £100,000) I would choose to use the Premium service and bag over 100,000 MR points at 1%, but if I have a smaller supplier invoice, for instance 5000 EUR, would I be able to select to use the standard Amex FX service I currently use? Or would I be stuck with the premium service and pay a 1.25% fee on top?
  
  At 1% I’m interested, but at the higher rates I’m not.
  - Rob says:
    
    3 Aug3 August 08:31
    
    I assume you can use both – I think Amex is hoping Premium Rewards will be used mainly for £ transactions. Note that we have no idea what the FX rate for non £ transactions.
  - Guy Incognito says:
    
    3 Aug3 August 09:15
    
    I believe this is the case, yes.
    
    We pushed them quite hard on their rates, so obviously while the fee increases the cost, for our particular circumstances and the volume of points it will accrue (not forgetting of course the corporation tax write off) it is worth it to use it when making FX payments.
  - Jonathan says:
    
    3 Aug3 August 20:29
    
    Hi Ian, I’m not sure to be honest. It’s the same department so I guess it’s down to the service you are signed up to standard/premium.
- David D says:
  
  3 Aug3 August 11:11
  
  For point 5, it will be a case of dealing with your suppliers individually. If you advise each of them you are looking to move to a one monthly payment run over a period of x number of month’s with a set payment date each month, then in my experience most suppliers like the knowledge of the guaranteed payment date. Only you know how your suppliers would react to this. If you have a poor relationship with any, opening up preliminary discussions and detailing why it will benefit both of you tends to be helpful.
Ian M says:

3 Aug3 August 07:57

If HMRC took a close look at this, would is stand up? The BillHop fee can be justified as helping manage cash flow (you’re using a credit card to pay a bill which you wouldn’t normally be able to). The Amex service doesn’t offer such a benefit. You’re paying directly from your bank account. So why pay an extra 1 – 1.25% for a service which you can perform without this fee?
- Sandgrounder says:
  
  3 Aug3 August 08:06
  
  It’s down to personal choice, you can’t insist people choose the lowest cost provider for anything. The issue might be that the points belong to the company, and are a benefit provided by reason of employment. It’s not the same as using your personal card to pay a bill, which then becomes a director’s loan to the company, repaid from company funds, in which case the points would probably not be taxable.
Guy Incognito says:

3 Aug3 August 08:01

I signed up for this following a chat with my account manager about a month ago.

Have used it to pay HMRC, payroll etc and while the fee is not cheap, the fact it reduces corporation tax liability is the key for me.

My accountant confirmed that in his opinion it is an allowable expense.

With this allied to the FX payments we would expect to boost our number of points hugely. It can also be used for FX transfers, bringing the rate to 1 point / £ as opposed to 1 point / £20 which is the real game changer for my particular business.
Harold R says:

3 Aug3 August 09:08

Does curve cap hmrc transactions at 50k?
- Rob says:
  
  3 Aug3 August 09:23
  
  No, but Curve comes with an initial transaction cap of £50,000 per rolling 365 day period (with subsidiary caps, eg £3,750 per day). You may get this increased, but the honest truth is that people who use it mainly for HMRC are unlikely to get it increased – mine has never gone up.
- Qwertyknowsbest says:
  
  3 Aug3 August 09:43
  
  Use your Curve for varied transactions (not just HMRC, cash withdrawals etc), build a record and request regular limit increases, providing any supporting info requested. I did this and now have £1.6m 365 day limit.
  - Simon says:
    
    3 Aug3 August 19:44
    
    +1
Ben Goulding-Huckle says:

3 Aug3 August 09:24

I’ve been using this service for a few months. Very happy with it. It’s confusingly named FX international payments but I pay UK and EU suppliers through it.