HM Revenue and Customs (HMRC) faces an increasing problem of older tax debts which are harder to collect, according to a spending watchdog.
Published 23rd Oct 2026, 15:20 BST
The National Audit Office (NAO) said HMRC is facing increasing issues from debtors who do not engage with it.
Debt that was more than a year old and not covered by a payment plan increased from £5.3 billion before the coronavirus pandemic to £18.6 billion at the end of 2025-26, with cost-of-living pressures making it harder for some taxpayers to pay.
At the end of 2025-26, 8.2 million taxpayers were in debt to HMRC, with their tax debts totalling £43.8 billion, or 4.7% of total tax receipts.
This is down from 5.6% in 2022-23, the NAO said, with a peak of 9.3% having previously been recorded at the end of 2020-21, during the coronavirus pandemic, when HMRC paused its debt enforcement activities.
But the NAO’s report said: “The tax debt balance remains significantly higher than the pre-pandemic period: in the five years between 2015-16 and 2019-20, tax debt was typically around £15 billion, or 2.5% of tax receipts.”
Nearly half of new debts are resolved within a month, which suggests that taxpayers forgetting to pay their tax bill or having short-term cash-flow problems are likely causes, the NAO said. But about half of the remaining debt balance is older than a year, making it harder and less likely to be recovered.
An HMRC spokesperson said: “We welcome this report, which recognises the progress we’re making in collecting the vast majority of tax debts while supporting customers who owe tax. We make it easy for those who can pay, support those who need help, and take firm action against those who choose not to engage with us.”