HMRC may gain power to seize unpaid tax directly from bank accounts
HMRC is expected to receive new powers in the Budget to take unpaid tax directly from people’s bank accounts without first obtaining a court order. The proposal is aimed at recovering debts from individuals and businesses who repeatedly ignore payment demands, as the Government seeks to reduce the tax gap.
Under current rules, direct deductions are limited to cases where more than £1,000 is owed and at least £5,000 would remain in the account afterwards; the new minimum could fall to a few pounds. HMRC says about 4.8 million people and businesses owe less than £10,000 each, totalling £4 billion, while the average individual debt is £950. Officials are also considering credit reference data to assess repayment capacity, but critics warn errors could affect vulnerable taxpayers; ministers say safeguards would be rigorous.
In short
- HMRC could take unpaid tax directly from bank accounts.
- The proposed threshold may fall to a few pounds.
- Safeguards are promised amid concerns about errors.
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The case for
Supporters argue that recovering overdue tax from people and businesses who repeatedly ignore demands helps ensure everyone pays what they owe and reduces the burden on compliant taxpayers. Allowing direct deductions without a court order could make collection more effective, while safeguards and checks on repayment capacity could limit deductions to cases where payment is affordable.
The case against
Critics argue that taking money directly from bank accounts without prior court approval risks depriving people of funds they need, especially if HMRC makes an error or misjudges their circumstances. Lowering the minimum debt and using credit reference data could widen that risk, so independent oversight and a meaningful chance to challenge a decision may be needed to protect vulnerable taxpayers.
Explained simply
HM Revenue and Customs (HMRC) collects taxes in the UK, including income tax from individuals and taxes from businesses. When people or businesses do not pay what they owe, HMRC can pursue the debt, but the rules limit when it can take money directly from a bank account.
The Government says collecting unpaid tax could help reduce the gap between the tax due and the amount collected. The issue affects both people who repeatedly ignore payment demands and those who may struggle to pay, so how debts are assessed and what safeguards apply matters to taxpayers.
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Originally published by Daily Mail as “Labour’s Budget will give taxman sweeping new powers to take money straight from bank accounts of people failing to pay”.