The tax authority has been granted the authority to directly access individuals’ bank accounts and retrieve funds from those who have outstanding tax payments. HM Revenue & Customs (HMRC) can now collect money directly from debtors who owe more than £1,000, including funds held in cash ISAs. This initiative, known as Direct Recovery of Debts (DRD), was reintroduced by HMRC following approval by Chancellor Rachel Reeves in the Spring Statement of March 2025.
The primary objective of this scheme is to target individuals who have the means to settle their tax liabilities but have persistently failed to do so. Typically, those impacted will be self-employed individuals or individuals with substantial income from investments, rental properties, or savings interest.
Before any funds are withdrawn from their accounts, taxpayers can expect a visit from HMRC agents to confirm the debt ownership, discuss repayment options, and ensure at least £5,000 remains in the account for essential expenses. There is also a 30-day window for individuals to appeal before HMRC can proceed with direct account deductions.
Individuals classified as ‘vulnerable’ will be exempt from this enforcement measure, according to HMRC. However, some tax experts have criticized the enhanced powers, emphasizing the need for compliance with tax obligations to avoid punitive actions.
Government data reveals that HMRC is owed £42.8 billion in unpaid taxes, a figure that has risen significantly post-pandemic. The government aims to recover an additional £11 billion in outstanding debts by the end of 2030. To strengthen debt recovery capabilities, the treasury has allocated £630 million, enabling HMRC to recruit 2,400 new debt management personnel.
An HMRC spokesperson emphasized the importance of pursuing tax payments from individuals who can afford but refuse to pay. Stringent safeguards are in place to protect taxpayers, and support will be provided to those requiring assistance with their payments.