Taxman owed £44bn — and will 'struggle to collect it all'

By the Editorial Team · Friday, October 23, 2026

At the end of the 2025-26 tax year, 8.2 million taxpayers owed £43.8 billion in unpaid taxes to HMRC, with over half of this debt being more than a year old and increasingly difficult to recover. Despite improvements in collection efforts that raised £10.7 billion since 2021, the National Audit Office warns that nearly £20 billion may remain uncollected, urging HMRC to enhance efficiency and focus on preventing new arrears.

At the end of the 2025-26 tax year, 8.2 million taxpayers owed a total of £43.8 billion in unpaid taxes to HM Revenue & Customs (HMRC), equating to 4.7% of all tax receipts, according to a recent report from the National Audit Office (NAO). While this represents an improvement from 5.6% in 2022-23 and is significantly lower than the 9.3% peak during the 2020-21 coronavirus pandemic, the report highlights a growing challenge with older tax debts, which are increasingly difficult to recover.

The NAO noted that roughly half—51%—of all unpaid tax amounts were more than a year old, up from 28% at the end of the 2019-20 tax year. The rise in older debts has been partly attributed to ongoing cost-of-living pressures that have affected taxpayers’ ability to settle their dues. HMRC estimates that nearly 46% of the total tax debt balance at the end of 2025-26 may remain uncollected, which could amount to around £20 billion.

Since 2021, HMRC has implemented several measures to improve debt management, including hiring additional staff, expanding its use of private sector debt collection agencies, and deploying data analytics to tailor responses depending on the debtor profile. These efforts reportedly yielded an additional £10.7 billion in revenue by the end of the 2025-26 fiscal year, at a cost of £368 million.

Despite these gains, the NAO stressed the need for further improvements in HMRC’s operational efficiency and workforce productivity to better address the accumulating stock of old debt. Gareth Davies, head of the NAO, acknowledged the progress made under challenging conditions but emphasized that the increasing proportion of older debt poses a significant obstacle to collection efforts. He recommended that HMRC prioritize preventing avoidable debt and swiftly addressing new arrears as they arise.

HMRC, in response to the report, welcomed its findings and emphasized its commitment to ongoing improvements. A spokesman highlighted the agency’s success in recovering the majority of tax debts while providing support to taxpayers facing difficulties.

The report reflects broader concerns about the balance between effective tax collection and the economic hardships faced by individuals and businesses, suggesting that while HMRC has made strides, the complexity of the debt landscape requires sustained and adaptive strategies going forward.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.