Summary

  • The UK government will develop a statutory power for regular bank deductions on established tax debts, after about ten contact attempts over nine to twelve months. The power is not yet law.
  • HMRC plans at least 28 days’ notice, but it will notify a non-debtor joint-account holder only when it has the information needed to do so. The final affordability method and the number of cases that pass the policy’s filters are still unknown.

HMRC has put a clock on its proposed bank-debit warning. It has not promised that every person sharing the account will receive it.

The UK government says it will continue developing a new statutory power to recover established lower-value tax debts through regular deductions from bank accounts. The plan would come into play only after HM Revenue and Customs had exhausted standard collection work, typically around ten contact attempts across nine to twelve months. Someone who contacts HMRC to arrange payment, including through a payment plan, leaves this route.

That off-ramp is central to the design. So are the limits: debts would be capped at £5,000 for an individual and £10,000 for a company, including interest and penalties. The first phase is confined to current accounts. Tax Credits debt, managed or disputed debt, deceased customers and people in insolvency proceedings are excluded; Child Benefit debt is included.

The government says it wants banks to execute clear statutory instructions, not decide whether a taxpayer can afford them. That division makes HMRC’s screening rules carry the real judgment. Banks would be the payment rail; the tax authority would determine which debt, account and repayment amount reach it.

The sharpest seam is a joint account. HMRC says it will look first to a suitable sole account and consider a joint account only if none is available. It plans to notify a non-debtor co-holder before a deduction only where HMRC has the necessary information, with an opportunity to object. The notice promise therefore has an information condition: the co-holder’s chance to respond depends partly on whether the authority already has their details. A 28-day window is useful only to someone who receives the notice.

This is a proposed system, not an existing bank-collection power. The 28-day minimum is longer than the 14 days in the original proposal. The revised package also includes a “Refund First” process while an objection is reviewed, complaint and redress routes, and manual review by a trained HMRC officer when an extra-support need is identified. Those protections have to work together with the account-selection rule, not sit beside it as reassuring headings.

Affordability remains unfinished. The government says credit-reference data may help, while acknowledging that no single method captures a person’s full financial position. It still needs to test how support needs are identified when a customer has not engaged. That gap matters because silence is the condition that moves a case toward deduction.

The eligible group remains unquantified. HMRC says more than 750,000 lower-value debts worth over £2 billion remain uncollected each year after multiple attempts. That is the wider debt pool. The government expects fewer than 250,000 deduction plans a year, but has not published how many cases will pass the caps, engagement test, account search and affordability assessment.

The next hard documents are still ahead. HMRC plans to co-design a Code of Practice and publish draft legislation in summer 2027. A test-and-learn phase is planned for 2028 into spring 2029, followed by phased rollout from 2029–30, companies first and individuals later. The code will show whether the 28-day clock, the joint-account notice and the refund route are one operating system—or three promises that fail at the hand-offs.

Sources