4.8 Million Taxpayers at Risk as Budget Gives HMRC Direct Bank Account Access
October 25, 2026 · Frisian News
Photo: Wikimedia Commons
The Budget is set to hand HMRC authority to deduct unpaid tax directly from bank accounts without a court order, targeting £4 billion owed by up to 4.8 million individuals and businesses. The existing £1,000 threshold would be cut to a few pounds, removing the judicial check that currently constrains such seizures.
Up to 4.8 million individuals and businesses owe a combined £4 billion in unpaid tax, according to HMRC's own estimates cited in BDO's response to a government consultation. The Budget is set to give HMRC the power to recover it without asking a judge first. Chancellor John Healey is expected to announce that the tax authority can instruct banks and building societies to make direct monthly deductions from current and savings accounts, with no court order required.
Under current legislation, HMRC can only reach directly into an account when a taxpayer owes more than £1,000 and will retain at least £5,000 after the debt is cleared, the Daily Mail reports. The Budget proposal would cut that floor to a few pounds and extend the reach to outstanding fines and accrued interest. The average unpaid bill among individual taxpayers is just £950, the Daily Mail notes, meaning the new threshold would pull in debts that the existing framework was designed to leave alone.
The £4 billion target sits within a broader £60 billion annual tax gap, according to government figures cited by the Daily Mail. HMRC's consultation, which closed on 28 August 2026, covered debts up to £10,000 for businesses and £5,000 for individuals. An automated process would handle the deductions. Credit reference agencies would calculate what each debtor can afford, with earlier proposals suggesting a cap at 50 per cent of disposable income, the Daily Mail and Newshub report.
HMRC told the Mirror that the picture being presented is "highly misleading." In 95 per cent of debt cases, the department said, the support it provides means customers pay without further action. HMRC put its own estimate of eligible taxpayers at fewer than 250,000 per year, well below the 4.8 million figure in BDO's analysis. The measures, HMRC said, target "only a small minority of taxpayers who can afford to pay but repeatedly refuse to do so."
The gap between HMRC's 250,000 estimate and BDO's 4.8 million figure is the central dispute. BDO, in its formal response to the consultation, called on HMRC to publish a breakdown of how many of those in scope are individuals and how many are businesses. Dawn Register, tax dispute resolution partner at BDO, said the proposals "raise important questions around affordability, taxpayer rights and whether HMRC has sufficient resources to operate the system fairly." She recommended trialling the scheme on corporate debts before extending it to individuals.
The automation is what concerns experts most. Dan Neidle, founder of Tax Policy Associates, warned that an automated enforcement engine might struggle to separate deliberate evasion from genuine difficulty. Under the proposed regime, the burden of challenge falls on the taxpayer: anyone who believes a deduction is wrong must contest it themselves. BDO identified three specific gaps: whether HMRC has the trained staff to run a new recovery regime fairly; how affordability will be assessed for vulnerable people and businesses facing temporary cash-flow pressure; and whether taxpayers will have a full right to challenge the underlying debt figure before any deduction begins.
A senior government source told the Daily Mail the system would include "rigorous" protections for vulnerable taxpayers. The Treasury declined to comment ahead of the Budget. Neither the source nor the Treasury specified what those protections are or when the details would be published.
Register put it plainly in BDO's consultation response: "Powers that allow HMRC to reach directly into taxpayers' bank accounts should only be introduced when the safeguards, appeals process and affordability protections are fully developed and clearly understood." They are not, and the Budget arrives anyway.
Sources
Published October 25, 2026 · Frisian News