The core of the proposal is to lower the threshold for direct recovery of debts. Currently, under legislation introduced in 2015, HMRC can recover unpaid taxes without a court order only if the debt exceeds £1,000 and at least £5,000 remains available in the taxpayer’s accounts after recovery. These powers, which were suspended during the pandemic and reinstated in 2025, are set to be extended to substantially smaller amounts. Reports indicate the minimum debt eligible for direct recovery could fall to just a few pounds, with the maximum debt pursued capped at £5,000 for individuals and £10,000 for companies.
The government asserts that the measures are designed to target an estimated 4.8 million individuals and businesses with tax debts below £10,000, collectively owing approximately £4 billion. The average outstanding balance among individual taxpayers is cited as £950. Officials argue that existing enforcement mechanisms are inefficient when applied to large volumes of small debts, particularly where taxpayers do not respond to repeated payment requests. The new system would utilize automated monthly deductions rather than relying on one-off payments, aimed specifically at those who “can afford to pay but repeatedly fail to do so.”
However, a critical element of the proposal has sparked significant concern: the absence of a statutory minimum balance safeguard. Unlike previous frameworks, there is currently no plan to leave a guaranteed minimum amount in a taxpayer’s account to cover essential living costs. The Government has stated it does not “think that a minimum account balance is a necessary safeguard,” arguing that other measures, including a “tailored affordability assessment” before deductions begin and the right to appeal, provide sufficient protection. Taxpayers would receive a 28-day notice period before deductions commence, which are scheduled to begin from July 2029.
The proposed powers also extend to joint bank accounts. HMRC will be able to take money directly from a couple’s joint account to settle one partner’s tax debt if no sole account is accessible. In such cases, the authority will not recognize the non-debtor partner’s contribution to the joint funds, meaning debts could be partially recovered from an individual who does not owe them. The Government maintains it will “only consider joint accounts if there was no viable sole account” available and that HMRC will notify the non-debtor and provide an opportunity to object where it holds the necessary information.
Tax experts and advocacy groups argue these safeguards are insufficient. Nimesh Shah of Blick Rothenberg described the new powers as a potential “sledgehammer” that could unfairly impact pensioners, low-income households, and individuals living with mental health issues. Shah expressed fear that the lack of clear protections could leave people without the means to pay mortgages, rent, or utility bills, pushing them into financial hardship. The Low Incomes Tax Reform Group, which represents taxpayers who cannot afford professional advice, has previously called for stronger protections, noting that unpaid tax bills often result from administrative mistakes, missed correspondence, or lack of awareness rather than deliberate avoidance.
The expansion of these powers follows a government consultation launched in June 2026 on recovering lower-value tax liabilities. While the proposals have not been formally confirmed in their final scope, the shift toward automated, low-threshold debt recovery represents a major change in the relationship between the state and individual taxpayers. The debate highlights a tension between improving the efficiency of tax collection and ensuring that enforcement mechanisms do not disproportionately harm those with the least financial resilience.
The next formal step involves the legislative process to enact these changes, with implementation of the automated deduction system targeted for July 2029. Until then, the scope of the “affordability assessment” and the specific criteria for determining when a joint account will be accessed remain subject to further government decision-making and parliamentary scrutiny.
