HMRC to take tax debts straight from bank accounts, even small amounts. The change may feature in Wednesday’s Budget

HMRC may be given wider powers to take money from the accounts of people who do not pay their taxes. The report came from The Times and was covered on Sunday 25 October by The Independent, among others. The change is expected to be in the Budget the chancellor will present on Wednesday 28 October.

Today HMRC can take money directly from an account only when the debt exceeds £1,000. After the deduction, at least £5,000 must remain across all the debtor’s accounts. According to reports, the threshold could fall to just a few pounds for people who have repeatedly avoided contact with HMRC. Penalties and interest may be added to the debt.

Tax arrears in the UK amount to about £60 billion. HMRC estimates that around 4.8 million people and businesses owe less than £10,000 each, about £4 billion in total. The average debt of an individual is about £950.

The Treasury did not comment on the reports. It says tax decisions are announced by the chancellor at the Budget. The Association of Taxation Technicians wants guarantees that the new powers will be aimed at the right people. The opposition called the idea absurd.

What it means for you

If you are self-employed, run a limited company or have Self Assessment arrears, even a small debt could more quickly end with money being taken from your account. This also applies to unpaid penalties for late returns. People who have changed address and are not receiving letters from HMRC are particularly at risk.

Our assessment

For now this is a press report, not a decision. But the government is looking for money, and collecting arrears does not require raising taxes, so the chances of it being introduced are high. The key will be the safeguards: whether HMRC must make contact first and whether you can appeal. We will check this after the Budget.

What to do

• Log in to your HMRC tax account and check whether you have any arrears or penalties.
• Update your address and contact details with HMRC.
• If you cannot pay in full, arrange a payment plan (Time to Pay).
• Beware of fake texts and emails “from HMRC” – HMRC does not ask for card details by message.

Source: The Independent / Yahoo News UK, citing The Times (25.10.2026).