Labour Proposes Bank Account Tax Raid to Recover £4 Billion

Source reports published 24 Oct 2026, 8:33 pm – 25 Oct 2026, 4:00 pm AEST

Labour has proposed changes to HM Revenue & Customs (HMRC) powers to allow automatic deductions from bank accounts, aiming to recover £4 billion in outstanding debts. The proposals include reducing the debt threshold to a few pounds and utilising credit reference agency data.

What happened

• Under the proposed changes, HMRC would gain the ability to automatically take sums from both current and savings accounts, targeting those with comparatively modest outstanding liabilities.
• Currently, HMRC’s power to seize funds is constrained by thresholds of £1,000 and a minimum account balance of £5,000.
• The proposed changes would reduce this threshold to as little as a few pounds.
• Officials intend to use data from credit reference agencies to determine debtor affordability, potentially limiting deductions to no more than half of a person’s disposable income.
• Dan Neidle, founder of Tax Policy Associates, expressed concerns about the system’s ability to distinguish between deliberate non-payment and genuine hardship.
• Jon Stride, chair of the ATT’s Technical Steering Group, highlighted ongoing HMRC operational issues.
• Fiona Fernie, a partner at Blick Rothenberg, warned of the risk of innocent taxpayers being unfairly charged.
• Shadow Chancellor Andrew Griffith criticised the plans, alleging they would ‘empty your bank account’.
• HMRC already uses a Direct Recovery of Debts mechanism, reinstated after the Covid-19 pandemic.
• Claire Cox, Debt Crisis To Clear UK, cautioned against HMRC’s reliance on automated enforcement without resolving existing operational issues.
• John Healey, the Chancellor, is under pressure to restore the government’s fiscal buffer, which has halved to around £11 billion.
• Gordon Brown has called for a higher tax on electronic gaming machines, estimating a potential £275m-£460m revenue increase.
• The government is also considering making big online marketplaces responsible for collecting VAT, potentially raising £1bn annually.

Original reporting

• GB News: Budget 2026: Labour gives taxman new powers to raid bank accounts in bid to recover £4billion
  2026-10-24T10:33:57+00:00
• BBC: Four ways Labour could raise money in the Budget without hiking income tax
  2026-10-25T06:00:15.900000+00:00