The tax authority has been granted renewed authority to directly access individuals’ bank accounts and retrieve funds from those who have outstanding tax debts. HM Revenue & Customs (HMRC) now has the ability to extract money directly from accounts, a move criticized as severe by tax professionals. Individuals owing over £1,000 to HMRC may have their bank or building society make direct payments to settle the debt, including from cash ISAs.
The Direct Recovery of Debts (DRD) initiative, introduced in 2015 but paused during the pandemic, has been reinstated by HMRC following approval from Chancellor Rachel Reeves in the Spring Statement of March 2025. The primary objective of the scheme is to target individuals who have the means to pay their taxes but have persistently neglected to do so. Most affected individuals are expected to be those who submit self-assessment tax returns, such as self-employed individuals or those with substantial income from investments, properties, or savings.
Before any funds are withdrawn from their accounts, taxpayers can anticipate a visit from HMRC agents to verify the debt, confirm the taxpayer’s identity, and discuss repayment options. The new regulations stipulate that individuals must retain a minimum of £5,000 in their accounts for essential expenses, and HMRC must allow a 30-day window for appeals before initiating direct account deductions.
HMRC has stated that individuals considered ‘vulnerable’ will be exempt from the scheme. Despite this, some tax experts have criticized the new powers, emphasizing the government’s increased efforts to recover outstanding tax revenues. Government data reveals that HMRC is owed £42.8 billion in unpaid taxes, with plans to recover an additional £11 billion by the end of 2030.
To enhance debt recovery capabilities, the treasury has allocated £630 million to HMRC, enabling the hiring of 2,400 new debt management staff. An HMRC spokesperson emphasized the importance of seeking payment from those who can afford to pay but refuse to do so, while reassuring ongoing support for customers requiring assistance with their tax obligations.