HMRC Direct Recovery of Debts 2026 — Bank Account Rules

HMRC can use Direct Recovery of Debts (DRD) to recover certain established tax and tax-credit debts directly from a person’s or business’s bank or building-society account. In the published 2026 process, HMRC can ask a bank or building society to place a hold on funds and then transfer the amount needed to pay the debt, but only after safeguards and contact steps have been followed.

DRD is not an automatic response to every late tax bill. HMRC says it is used for a minority of cases where a customer can afford to pay but chooses not to, and where repeated attempts to make contact have been ignored. If you cannot pay, contact HMRC promptly and check the official payment-plan route before the situation escalates.

What is Direct Recovery of Debts?

DRD is an HMRC debt-collection power. It is separate from calculating the tax, filing a return or issuing a normal payment reminder. HMRC's issue briefing says the power allows it to recover money from a current or savings account, including a Cash ISA, when the safeguards in the process are met.

The relevant debt must be established. A customer should not treat DRD as a substitute for appealing a liability or correcting an error. If the amount is wrong, use the appropriate dispute or appeal route and keep evidence. If the amount is right but cannot be paid, contact HMRC as early as possible.

When can HMRC consider DRD?

HMRC's published safeguards say it will only consider DRD for tax and tax-credit debts of more than £1,000. The threshold is a feature of this recovery process; it is not the same as the £1,000 trigger for UK Self Assessment Payments on Account.

HMRC also says the debt must be established, the timetable for appeals must have passed and the customer must have repeatedly ignored attempts to make contact. For individuals, HMRC says a face-to-face visit takes place before the debt is considered for DRD. The visit is intended to confirm the identity and debt, explain what is owed, discuss payment options and identify whether extra support is needed.

Companies and limited liability partnerships will not usually receive a face-to-face visit under the published process. HMRC says they will still receive multiple opportunities to discuss and agree how the debt can be resolved before HMRC contacts the bank or building society.

How does the bank-account hold work?

The published rights guidance says HMRC can instruct banks and building societies to provide information about money in sole or joint accounts, including Cash ISAs. HMRC can then place a hold up to the amount owed. The bank does not transfer the held money immediately: the customer has an opportunity to object within the published time limit.

HMRC says it can only place a hold if there are enough funds across the accounts to leave an available balance of at least £5,000. This is assessed across the accounts rather than as £5,000 left in each account. The safeguard is designed to protect money needed for essential household or business costs, but it is not a promise that every person will have every outgoing covered.

Joint accounts have a separate consideration. HMRC says it will assume each account holder owns an equal share when considering the hold, and it must tell the other account holder that a hold has been placed on part of the account. The other account holder may have grounds to object if they have a beneficial interest.

What can you do after a hold notice?

The hold notice should be read carefully. HMRC's rights guidance says you have 30 calendar days from the date HMRC sends the hold notice to object in writing. The objection must explain the ground relied on and include supporting evidence where relevant.

HMRC lists the following objection grounds:

• the debt has already been paid in whole or in part;
• there was no relevant sum due when the hold notice was issued;
• you did not hold the account in question at that time;
• the hold would cause exceptional hardship to you or another person; or
• a third party has a beneficial interest in the account.

The published guidance says an objection must be sent in writing to the address specified by HMRC. Do not assume that a phone call, an online message or a general complaint automatically counts as a DRD objection. Use the instructions in the hold notice and keep proof of posting or delivery.

What happens if you do not object?

If HMRC does not receive an objection within 30 calendar days, and the debt has not been paid or covered by an agreed payment plan, HMRC says it can tell the bank or building society to transfer the held money. The bank then sends the money to HMRC towards the debt.

If you object on time, HMRC says it will make a decision within 30 working days of receiving the objection. If it rejects the objection, the published guidance describes a right to appeal to a county court on specified grounds. The route differs between England and Wales and Northern Ireland, so a live case should follow the current HMRC instructions rather than a generic internet checklist.

What if you cannot pay?

DRD and inability to pay are not the same situation. HMRC says people who realise they cannot pay on time should get in touch as soon as possible. GOV.UK says you may be able to set up a payment plan for an overdue tax bill in monthly instalments.

GOV.UK says a payment-plan application may require bank details and income-and-spending information. Eligibility and terms depend on the debt and circumstances. If you have a company debt, HMRC may also ask how the business will reduce the debt and whether assets or other funding are available.

What is different from the 2026 lower-value debt proposal?

The separate HMRC lower-value tax debt proposal describes a June 2026 consultation about extending recovery options for lower-value debts where a customer can afford to pay but refuses to engage. It is not the same as this guide's summary of the published DRD process.

The proposal's final scope, legal basis, implementation date and relationship with existing DRD safeguards remain to be confirmed. Do not use the proposal as evidence that HMRC can already apply a new power to your account.

What is confirmed and what should you verify?

In HMRC's current published DRD material

• DRD can involve direct recovery from current or savings accounts, including Cash ISAs.
• HMRC describes a debt threshold above £1,000 for considering DRD.
• HMRC describes a £5,000 minimum available balance safeguard.
• Individuals receive a face-to-face visit before their debt is considered under the published process.
• The published objection window is 30 calendar days from the hold notice.

Verify in your own notice or current guidance

• the exact debt and tax period;
• the relevant HMRC contact details and objection address;
• whether a payment plan has been agreed and recorded;
• whether a joint-account or third-party interest affects the hold; and
• the correct court or appeal route if HMRC rejects an objection.

Build a response file immediately

Save the hold notice, the debt statement, bank correspondence, payment-plan requests, objection, delivery proof and every HMRC response in one dated file. Mark which amounts are disputed, which are already paid and which belong to another account holder. If exceptional hardship is relevant, record the essential bills, dependants, medical circumstances or business obligations that support the objection. Do not send more personal or financial information than HMRC's notice requests, but do provide enough evidence for the stated ground to be assessed.

Keep the original documents and note the date each deadline expires; screenshots alone may not show the complete notice or its delivery date.

For future cash-flow planning, the Tax Reserve Assistant can help organise a reserve, but it cannot change a tax liability, pause DRD or guarantee a payment plan. Use HMRC's current payment and contact services for the legal amount and available options.

Frequently Asked Questions

This guide reflects HMRC Direct Recovery of Debts material updated on 11 June 2026 and the associated rights guidance. Check HMRC's current notice and official guidance again before acting on a live debt or objection.

Reconcile the debt before choosing a response

Compare the DRD notice with the HMRC account, the original return or assessment, payments already made, interest and any penalty. Record the tax period and the date each amount was allocated. If a payment-plan request, appeal, repayment claim or insolvency process is already active, keep the reference and written status with the response file. For joint or third-party funds, document ownership separately from the taxpayer’s liability. A bank balance does not prove that the whole balance belongs to the debtor, and a disputed balance does not disappear because a hold has been placed.

Official sources

• HMRC: Direct Recovery of Debts issue briefing
• HMRC: Direct Recovery of Debts — rights and responsibilities
• GOV.UK: If you cannot pay your tax bill on time
• GOV.UK: Payment problems — enquiries
• HMRC: Direct Recovery of Debts and vulnerable customers