HMRC has revealed that it had £42.8 billion in outstanding tax debt at the end of March 2025, equivalent to 5% of total tax receipts. The figures appear in its corporate report, The HMRC tax debt strategy – update.
The report also highlighted progress in recovering unpaid tax, with HMRC resolving £48.7 billion of tax debt in the first two quarters of 2025-26, compared with £21.8 billion during the same period in 2019-20. HMRC said the outstanding debt balance had fallen as a proportion of tax receipts, despite growth in the tax base.
HMRC’s Tax Debt Strategy, published in October 2023, set out 4 strategic pillars to guide their approach to manage and resolve tax debt. The strategy is focused on preventing tax debt, tailoring interventions to taxpayers’ circumstances, improving debt recovery and being adaptable. Measures include payment reminders, improved and expanded digital services, more use of private sector debt collection agencies and additional debt management staff.
HMRC is also increasing its focus on older debts. The report states that debt more than a year old and not covered by a managed payment arrangement rose from £5.3 billion in 2020 to £18.8 billion in 2025.
HMRC is also working to provide tailored support to taxpayers experiencing financial hardship or who have personal difficulties. Support can range from an extended time to pay arrangement to receiving one-to-one dedicated extra support.
