Recent developments have given tax authorities the ability to directly access individuals’ bank accounts to recover unpaid taxes.
HM Revenue & Customs (HMRC) has been granted the authority to withdraw funds directly from accounts in a move labeled as “severe” by tax professionals.
Individuals in debt to HMRC for amounts exceeding £1,000 may now have funds withdrawn directly by their bank or building society, including cash ISAs.
The Direct Recovery of Debts (DRD) scheme, introduced in 2015 but paused during the Covid pandemic, has been officially reintroduced by HMRC following approval by Chancellor Rachel Reeves in the Spring Statement of March 2025.
The initiative aims to target individuals with the means to settle their tax liabilities but have persistently evaded payment, as per officials.
Most impacted individuals are expected to be those who file self-assessment tax returns, such as self-employed individuals or those with substantial income from investments, rental properties, or savings interest.
Prior to any withdrawals, taxpayers can anticipate a visit from HMRC agents to confirm the identity of the taxpayer, verify the debt ownership, and discuss repayment options before taking action.
Under the new regulations, individuals must maintain at least £5,000 in their accounts to cover essential expenses, with HMRC required to provide a 30-day appeal window before initiating withdrawals.
HMRC assures that individuals classified as ‘vulnerable’ will be exempt from the scheme; nonetheless, some tax experts have criticized the new powers.
Dawn Register, a tax dispute resolution partner at advisory firm BDO, emphasized the government’s firm stance on pursuing non-compliant taxpayers in light of the challenging financial landscape.
According to official data, HMRC is owed £42.8 billion in unpaid taxes, a figure that has surged notably since the pandemic, with the government aiming to recover an additional £11 billion in outstanding debt by 2030.
To enhance debt recovery capabilities, the treasury has allocated £630 million, including the recruitment of 2,400 new debt management staff at HMRC.
An HMRC spokesperson emphasized the importance of pursuing outstanding taxes from those with the means to pay but refuse to do so, highlighting the presence of robust safeguards and continued support for individuals needing help with payments.
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