Industry News - 28th October 2026
Could HMRC soon take payments directly from your bank account to recover unpaid tax?
HMRC is considering new powers to help recover persistent tax debts from individuals and businesses that repeatedly fail to respond to requests for payment.
The proposals could allow HMRC to collect outstanding tax through affordable monthly payments taken directly from a taxpayer’s UK bank or building society account.
While these changes are still under review, they could have important implications for businesses struggling with unpaid tax bills.
📊 Why is HMRC considering these changes?
Recovering unpaid tax isn’t always straightforward, particularly when taxpayers don’t respond to letters, reminders or other attempts to arrange payment.
HMRC estimates that more than 750,000 lower-value tax debts, worth over £2 billion, remain unresolved each year after its usual collection efforts have failed.
The proposed measures aim to make recovering these debts more efficient, without immediately resorting to more costly enforcement action.
🏦 How would the new payment system work?
Under the proposals, HMRC could arrange monthly deductions directly from a taxpayer’s UK bank or building society account.
The proposed limits are:
- Individuals: Tax debts of up to £5,000.
- Businesses: Tax debts of up to £10,000.
These limits apply to the debts covered by the proposed process, not the amount HMRC could deduct each month.
Importantly, HMRC couldn’t use these powers straight away. The proposed process would apply only after HMRC’s standard attempts to collect the outstanding debt had been exhausted.
📩 Would you receive a warning before money is taken?
Yes. Under the proposals, HMRC would first issue a formal Pre-Deduction Notice (PDN).
This would give taxpayers one final opportunity to:
- Pay the outstanding tax.
- Contact HMRC to discuss their circumstances.
- Arrange a Time to Pay agreement.
- Raise a formal objection if they believe the proposed deduction is incorrect.
The government has suggested a 14-day notice period, although some professional organisations have called for this to be extended to at least 30 days.
The final arrangements have yet to be confirmed.
🤝 What if your business is struggling financially?
The proposals also include safeguards intended to protect taxpayers experiencing genuine financial difficulties.
These could include affordability checks to ensure deductions are manageable, along with additional support and manual reviews for people who may be particularly vulnerable.
The intention is to recover outstanding tax without creating unnecessary financial hardship.
However, the details of these safeguards will determine how the system works in practice.
📅 When could these changes happen?
HMRC’s technical consultation closed on 28th August 2026, and the government is expected to publish its response later this year.
For now, these remain proposals, and no implementation date has been confirmed.
Businesses should keep an eye on developments, particularly if they have outstanding tax liabilities or are struggling to keep up with payments.
💡 Perrigo Perspective
At Perrigo Consultants, we understand that cash flow pressures can make it difficult for businesses to keep on top of their tax obligations.
But ignoring an outstanding tax bill rarely makes the problem go away.
Our advice is: If you’re struggling to pay HMRC, don’t wait until the reminders start piling up. Review your finances, understand what you owe and explore your options as early as possible.
HMRC may agree to a Time to Pay arrangement, allowing you to spread your payments over an agreed period.
Being proactive will help you avoid added stress, protect your cash flow and keep your business on track.
🔍 Worried about outstanding tax debts?
Whether you’re dealing with an overdue tax bill or you’re just looking to plan ahead, the right advice can make a real difference.
At Perrigo Consultants, we’re here to help you understand your tax obligations, manage your finances and explore the options available to your business.
Don’t wait until a tax debt becomes a bigger problem.
If you’re concerned about outstanding tax debts or struggling to keep up with payments to HMRC, contact the Perrigo Consultants team on 01299 488860 or book a FREE discovery call below.
Internet link: You can also read more about HMRC’s proposed changes in the Proposals to tackle lower-value tax debts consultation and find guidance on What to do if you cannot pay your tax bill on time on the GOV.UK website.
