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HMRC Gains New Powers to Deduct Tax Debts Directly from Joint Bank Accounts

By Drooid · · How we work

In this breakdown

01

Core Event: Expanded Direct-Recovery Authority

From July 2029 HM Revenue & Customs (HMRC) will be able to instruct banks to make regular deductions from current accounts to recover unpaid tax and child-benefit debts. The maximum debt pursued is £5,000 for individuals and £10,000 for companies. HMRC must give a 28-day notice before deductions begin and will notify the non-debtor, offering an opportunity to object. No statutory minimum balance is guaranteed to remain in the account.

iNewsBudget 2026: Healey grants HMRC sweeping powers to chase tax debts Birmingham MailBirmingham Mail

02

Background & Context

The new powers build on the existing Direct Recovery of Debts (DRD) scheme, which was temporarily paused during the Covid-19 pandemic. Under DRD, deductions could be taken only for debts over £1,000 and a minimum of £5,000 had to be left in the account, with a face-to-face visit from an HMRC agent. The Treasury’s Budget “red book” outlines the expansion, citing an expected additional £320 million in Treasury revenue in 2031-32. The Budget also earmarks £70 million over five years to expand HMRC’s partnership with private-sector debt-collection agencies and funds the recruitment of 670 additional compliance officers by 2029-30.

Budget 2026: Healey grants HMRC sweeping powers to chase tax debts

Visual evidence

Images from the story

EMBARGOED TO 0001 SATURDAY OCTOBER 21 File photo dated 06/01/15 of money in a piggy bank. Some pensioners could have to start setting money aside for out-of-the-blue tax bills, a consultancy firm is warning. Frozen income tax thresholds, alongside bumper state pension rises, may push more pensioners into paying tax. Issue date: Saturday October 21, 2023. PA Photo. Consultants LCP (Lane Clark & Peacock) warned that growing numbers of pensioners could be pushed over the tax threshold based purely
EMBARGOED TO 0001 SATURDAY OCTOBER 21 File photo dated 06/01/15 of money in a piggy bank. Some pensioners could have to start setting money aside for out-of-the-blue tax bills, a consultancy firm is warning. Frozen income tax thresholds, alongside bumper state pension rises, may push more pensioners into paying tax. Issue date: Saturday October 21, 2023. PA Photo. Consultants LCP (Lane Clark & Peacock) warned that growing numbers of pensioners could be pushed over the tax threshold based purelyPhoto: inews

03

Data & Statistics

  • Projected extra revenue: £320 million in 2031-32.
Budget 2026: Healey grants HMRC sweeping powers to chase tax debts
  • Anticipated annual deduction plans: fewer than 250,000.
Budget 2026: Healey grants HMRC sweeping powers to chase tax debts
  • Funding for debt-collection partnerships: £70 million over five years.
Budget 2026: Healey grants HMRC sweeping powers to chase tax debts
  • New compliance staff target: 670 officers by 2029-30.
Budget 2026: Healey grants HMRC sweeping powers to chase tax debts

04

Official Statements & Responses

It also notes that a minimum-balance safeguard will continue to be considered as part of the overall set of protections.

iNews

05

Conflicting Reports & Gaps

Sources differ on the threshold for future deductions. Some reports state that the existing DRD scheme applies only to debts over £1,000 with a £5,000 minimum balance left untouched, while other commentary suggests the new powers could lower the threshold to “a few pounds” for repeat non-engagers. The legislation’s final wording on whether savings accounts will be immediately included remains unspecified.

iNews

06

Verbatim Quotes

  • “I worry that if (inevitably) the system is automated, it may not be able to distinguish deliberate non-payment from illness or missed correspondence.” — Mr Neidle
Birmingham Mail

07

What’s Next

The government has pledged to draft a code of practice, with a draft legislation expected next summer. It also indicated that, should “evidence emerge of deliberate behaviours” such as moving money to savings accounts, HMRC will consider extending the powers to additional account types. A formal consultation on the safeguards is underway, and HMRC will publish detailed guidance once the code is finalized.

iNews