- On 26 November 2025 HMRC published the HMRC tax debt strategy update, outlining progress made so far and the work on the future initiatives which include:
- consulting on mandating Direct Debit for payments of PAYE and VAT, which is intended to prevent mistakes and misallocations which result in short term debt
- requiring income tax self-assessment taxpayers with PAYE income to pay more of their self-assessment liabilities in-year via PAYE from 6 April 2029.
- Debt owed by taxpayers that do not engage with HMRC, despite repeated contact attempts, has increased. There has been a significant increase in debt that is over a year old and not in a managed payment arrangement from £5.3 billion in 2020 to £18.8 billion in 2025. At the 2025 Budget, the government announced the following steps to deal with this challenge:
- enhancing their plans announced at Spring Statement 2025 to recruit additional debt management staff
- increasing HMRC’s use of debt collection agencies to collect older debts, following a successful trial launched after Spring Statement 2025, to support HMRC in addressing the volume of debt for which enforcement action is uneconomic.
- Timing: the government will publish, in early 2026, a consultation on self-assessment taxpayers with PAYE income paying more of their self-assessment liabilities via PAYE, and on timelier tax payment for those with only self-assessment income.
Resources (click to open)
- The HMRC tax debt strategy — update - GOV.UK (HMRC – 26 November 2025)
