HMRC Bank Account Powers 2026: The UK government is said to be seeking to give HM Revenue & Customs (HMRC) new powers to reclaim unpaid tax straight from people’s current and savings accounts, even smaller debts owed by persistent tax avoiders. Chancellor John Healey is set to outline the plans in the Autumn Budget, as the government looks to reduce Britain’s estimated £60 billion tax debt, The Times said.
HMRC said that about 4.8 million people and firms owe less than £10,000 each and that the total amount of the debt is about £4 billion. The average debt for each individual taxpayer is roughly £950.
HMRC May Pursue Lesser Tax Debts
Under the guidelines HMRC can take qualifying tax obligations of £1,000 or more direct from bank and building society accounts, where the conditions are right. This includes ensuring there is at least £5,000 left in the debtor’s accounts once the money is retrieved. Direct recovery powers were introduced in 2015, stopped during the pandemic and reintroduced.
The Times, however, says the government is considering lowering the threshold, which could mean HMRC chasing debts of only a few pounds in some cases of taxpayers who regularly fail to pay what they owe.
The proposed deductions could possibly include related penalties and interest, but the exact extent of such additional powers would depend on the actual measures disclosed.
Concerns About Access to Bank Accounts
The rumoured plans have sparked worries about what impact the extended powers could have on people suffering with their finances. The shadow chancellor, Andrew Griffith, said the suggestion was “absurd”. He said the measures might allow HMRC to collect money for relatively tiny arrears, leaving people unable to afford critical costs, like rent.
The Association of Taxation Technicians (ATT) has stressed that HMRC should not use the new powers without guarantees that the right protections are in place and that the right taxpayers are targeted.
What Does It Mean When You Overdraw Your Bank Account?
HMRC’s current direct recovery powers typically don’t allow it to retrieve money from a negative bank balance. An overdrawn account is not an account with money available in it and current rules mean there are conditions that HMRC has to achieve before it can collect money directly.
The exact impact on persons with low balances, overdrafts or in financial distress would rely on the ultimate rules and protections that are brought in if the proposals are introduced. This is not to say that HMRC will be able to automatically empty anyone’s bank account on the strength of these stated plans. FileTaxes
HMRC Clamping Down on Unpaid Tax
The proposed plans are announced as the National Audit Office (NAO) has flagged increasing difficulties for HMRC in dealing with those who owe tax but do not communicate with the department . Since 2021, HMRC has taken a number of efforts to increase debt recovery, such as boosting staffing, increasing the use of private sector debt collection agencies and utilising data to customise its approach to various debtors. HMRC forecasts these measures generated an extra £10.7 billion in revenue by the end of the 2025-26 financial year, compared to £368 million of expenditure.
Online Businesses Could See Stricter Tax Laws
The Chancellor’s Budget is also said to contain measures targeting online marketplaces such as Amazon, eBay and Temu. The plans would make big online platforms liable for collecting tax due from retailers using their sites to offer goods and services, especially overseas sellers who have been accused of manipulating current laws to avoid VAT.
The moves are said to be aimed at raising as much as £1bn, cash that might be used to cut business rates for high street shops. There has also been discussion regarding possible tax rises on banks. The Trades Union Congress (TUC) has advocated for a windfall tax on banks, claiming their massive earnings and bonus payments should be used to help pay for cuts in home energy prices through a social tariff. FileTaxes
The Chancellor would make choices on taxation at fiscal events, not in routine statements on speculation or plans, a Treasury spokesperson told The Independent. The proposals have not substantiated the information provided here. The specific details, including whose debts could be targeted and what protections will be provided for account holders, will be determined by the measures formally announced by the government.