HMRC faces surge in ageing tax debts that are increasingly hard to collect
A National Audit Office report says older tax debts at HMRC have risen sharply, with over half now more than a year old and many unlikely to be paid.
According to a National Audit Office review, HM Revenue and Customs is confronting a growing stock of old tax debts that are harder to recover. Debt older than a year rose from £5.3 billion pre-COVID to £18.6 billion at the close of 2025-26, while total tax arrears reached £43.8 billion, or 4.7% of total tax receipts. The proportion of debt over twelve months increased to 51%, and HMRC believes nearly half of the outstanding balance may never be collected.
Since 2021 the agency has expanded staff, engaged private debt-collection firms and leveraged data, generating an extra £10.7 billion in revenue against £368 million in costs. The NAO recommends further digitising payment plans, improving evidence-based interventions, and focusing resources on the most entrenched debts. Gareth Davies of the NAO highlighted the need for quicker action on new debts and better productivity from existing systems.
Why it matters
Rising, hard-to-collect tax debts threaten UK revenue and could prompt stricter enforcement or policy changes.
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