Corporate report

Issue Briefing: Direct Recovery of Debts

Updated 11 June 2026

The vast majority of customers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.

This briefing explains how HMRC recovers tax debt by requiring banks and building societies to pay directly from the accounts of that minority. It details how this works in practice, and the robust safeguards we apply. These safeguards are outlined in detail in section 4.

1. Why is recovering debt important?

Individuals and businesses need to pay the tax that is due otherwise it is unfair on the honest majority. The money we collect is vital to fund public services.

The vast majority of customers pay their taxes in full and on time. In 2024 to 2025, HMRC brought in £858.9 billion in tax. About 90% was paid on time but the rest became a debt.

Some customers require an additional prompt or reminder to pay what they owe, and a significant number of people pay once they are contacted.

Direct Recovery of Debts (DRD) is used when an individual or business can afford to pay what they owe but are choosing not to. These powers are an effective incentive to pay and were used only 19 times in two years, before pausing during the COVID-19 pandemic.

2. What’s happening now?

The government announced in the Spring Statement 2025 that HMRC would re-start the use of DRD for individuals and businesses who choose not to pay the tax they owe.

HMRC paused the use of DRD during the COVID-19 pandemic and in September 2025 re-started its use in a controlled ‘test and learn’ phase, before rolling out DRD to more customers from April 2026 onwards.

3. How it works

This policy allows HMRC to recover money owed by requiring banks and building societies to pay HMRC directly from a current or saving (including Cash Individual Saving Accounts) account held by a customer in debt to HMRC. DRD can only be used subject to the safeguards that are detailed in section 4.

4. The safeguards

There are safeguards in place to ensure that customers in debt to HMRC do not suffer undue hardship once money is taken from their accounts and that protection is in place for customers who need extra support. This includes:

• only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored our attempts to make contact
• guaranteeing that every individual (not a company or limited liability partnership) in debt to HMRC will receive a face-to-face visit from HMRC agents before their debts are considered for recovery through DRD, this meeting will provide a further opportunity for us to:
  - personally identify the individual and confirm it is their debt
  - explain to individuals what they owe, why they are being pursued for payment, and discuss payment of the debt
  - discuss options to resolve the debt, including offering a Time to Pay payment plan, where appropriate
  - identify individuals who are in need of extra support and offer them the support from a specialist team to help them settle their debts
• Customers registered as a company or a limited liability partnership will not usually receive a face-to-face visit. These customers will still be given multiple opportunities to discuss and agree how their debt can be resolved before HMRC contacts their bank or building society to progress DRD
• Where a customer is identified as needing extra support, DRD activity in progress will be stopped, and they will be offered extra support. If a customer does not engage with the Extra Support Team, or the team determine that a customer is no longer in need of extra support, normal debt recovery processes will resume, which may include DRD
• only considering the use of DRD on those with tax and tax credits debts of more than £1,000
• always leaving a minimum of £5,000 in the customer’s accounts, so that we do not put a hold on money needed to pay wages, mortgages or essential business or household expenses

There is a clear process in place for customers to object or appeal. This includes:

• providing a 30-day window for customers to send an objection to HMRC. This will apply from when HMRC confirms they have put a hold on relevant funds (the amount the customer owes to HMRC) in the customer’s account. Money will still be held within the bank, and no funds will be transferred until this period has passed and a decision will be made on objections within 30 days
• If HMRC rejects an objection, customers can appeal against HMRC’s decision to a county court on specified grounds, including hardship and third-party rights

HMRC is committed to clear governance and transparency. The Commissioners of HMRC will maintain oversight of the use of the power and statistics will be published on the number of times the power is used, and appeals are raised.

5. Helping those in difficulty

Some people experience difficulty paying their tax. This often happens when their life is affected by a major personal event, or their business develops a problem. HMRC offer extra support for those who need it.

When people realise, they are not going to be able to pay on time, or if they require additional assistance with their taxes, they should get in touch as soon as possible.

HMRC has a strong track record in this area, with:

• highly effective Time to Pay (TTP) payment plans, which sees 9 in 10 agreements successfully completed. HMRC continues to enhance their online TTP service to allow more customers to set up their own payment plans, without needing to call HMRC
• the extra support team providing additional support via phone or video appointments for customers whose health condition or personal circumstances make it difficult to contact HMRC. Customers can ask an adviser when they call HMRC or use the extra support team webchat

To make sure customers who need extra support are fully supported during the use of DRD:

• a customer that meets the strict criteria for DRD but is considered to be need of extra support, HMRC will stop DRD activity  and offer help through the Extra Support Team
• HMRC worked with voluntary organisations and professional bodies on their communications to customers affected by DRD, to ensure they provide helpful advice on how to seek further assistance