UK Tax Debt Hits £43.8 Billion as Recovery Risks Rise
HM Revenue and Customs owes £43.8 billion in unpaid taxes, with the National Audit Office warning that nearly half may never be recovered.
The National Audit Office reports that HM Revenue and Customs is owed £43.8 billion in unpaid taxes, representing 4.7% of all tax receipts. At the end of the 2025-26 financial year, 8.2 million taxpayers were in debt. The watchdog highlighted a surge in debts older than one year, which rose from £5.3 billion before the pandemic to £18.6 billion, primarily due to cost-of-living pressures.
HMRC estimates that 46% of the current outstanding balance may never be recovered. While the tax authority generated £10.7 billion in additional revenue through new collection measures since 2021, the National Audit Office recommended increasing workforce productivity and automating payment plans to improve efficiency.
To combat the debt crisis, HMRC is consulting on the introduction of direct debits and expanded powers to recover small debts directly from bank accounts. Final decisions on these measures are expected in the upcoming Budget.
