Can HMRC take money from your business bank account?

HMRC can already take unpaid tax straight from a business bank account, but only for debts over £1,000, only after repeated ignored contact, and it must leave at least £5,000 across your accounts. The Autumn Budget on 28 October 2026 confirmed plans to go further, with smaller tax debts collected from company bank accounts in regular instalments from 2029, so the time to deal with a tax bill you can't meet is before HMRC stops writing letters.

For a café, shop, salon or takeaway, a slow January can leave a VAT, PAYE or Corporation Tax payment short. Here is what HMRC can do now, what is changing, and what to do.

Can HMRC take money from my business bank account?

Yes, in England, Wales and Northern Ireland, under a power called Direct Recovery of Debts. Scotland uses a different process, a summary warrant. HMRC's own briefing (updated June 2026) says it uses the power when a business or individual "can afford to pay what they owe but are choosing not to". The current safeguards are:

• the debt must be more than £1,000
• HMRC must always leave at least £5,000 across your accounts
• funds are first put on hold, and you get a 30-day window to object before anything is moved
• if HMRC rejects your objection, you can appeal to a county court, including on hardship grounds
• individuals get a face-to-face visit first; companies and LLPs usually do not, so a limited company can reach this stage with less warning

HMRC describes its enforcement powers as a "last resort". They come after letters, calls and, often, a debt collection agency.

What did the Budget change?

The government consulted between June and August 2026 on letting HMRC collect smaller, established tax debts by taking affordable monthly instalments directly from a bank account. Commentary on the Budget from accountants and the business press reports that:

• the power is planned to start from July 2029, beginning with companies before it extends to individuals
• limits of up to £10,000 for companies and £5,000 for individuals are reported
• it is aimed at people who ignore repeated contact, reported as around 10 attempts over 9 to 12 months
• it is not meant to apply where you are already working with HMRC to manage the debt
• safeguards such as affordability checks, manual review and refunds for mistakes are planned, with detail still to be consulted on

The final rules have not been published, so treat the figures as the direction of travel, not settled law. The Budget also confirmed more money for HMRC's work with private debt collection agencies.

What this means for your business

Nothing changes overnight, but HMRC is building faster, more automatic ways to collect tax, and businesses that go quiet will feel it first.

For a limited company, three points matter most:

1. Silence is the risk, not the debt itself. Both the current power and the planned one are aimed at people who don't respond. Engaging early keeps you in control of how and when you pay.
2. Your account balance is not ring-fenced for wages and suppliers. Under the current rules HMRC must leave £5,000 across your accounts, which may not go far against a week of wages and supplier bills. That is why a tax arrears problem can quickly become a cash flow problem.
3. Seasonal businesses are most exposed. If your VAT quarter lands just after your quietest month, the bill reflects busy trading while your bank balance reflects slow trading.

What should you do if you can't pay a tax bill on time?

1. Contact HMRC before the due date if you can. GOV.UK says to reply "as soon as possible" to any letter about unpaid tax.
2. Check whether you can set up a Time to Pay arrangement. Many businesses can set one up online through GOV.UK; otherwise you contact HMRC's Payment Support Service. You must be authorised to set up a Direct Debit on the account. HMRC will ask what you can pay each month, what other taxes are due, and about your income, spending and savings.
3. Be realistic about the monthly amount. GOV.UK says you'll usually be asked to pay around half of what you have left over each month. A plan you can't keep makes things worse.
4. Keep up with new tax payments as they fall due. A payment plan covers the arrears, not next quarter's bill.

How we look at a business before a tax bill

When an owner tells us a VAT or PAYE payment is going to be tight, we don't start with finance. We start with three questions, using their last 12 months of bank and card statements:

• When is the gap? We line up the tax due dates against the weekly takings to see whether the shortfall is a one-off week or a pattern.
• What is leaking? We check the card statement for fees that have crept up, such as monthly minimums, terminal rental or authorisation charges, because money lost there is money not available for HMRC.
• What does each option really cost? If a Time to Pay arrangement covers the gap, that is usually the first route to explore. If the business also needs working capital, we put the total repayable of any finance option, in pounds, next to the cost of the arrangement, so the owner can compare them side by side.

Sometimes the honest answer is to agree a plan with HMRC and borrow nothing.

Frequently asked questions

Will HMRC take money without telling me first?

Not under the current rules. HMRC must have tried to contact you, funds are put on hold first, and you have 30 days to object before anything is transferred. Companies usually don't get a visit, so open every HMRC letter.

Does the new power start straight away?

No. Reports of the Budget say it is planned from July 2029, starting with companies, and the detailed rules and safeguards are still to be consulted on.

Should I borrow to pay a tax bill?

Check Time to Pay first. Finance can help with a wider cash flow gap, but it has a cost and must be repaid on time, so compare the total repayable. Approval and terms depend on your trading history.

Talk to us before the deadline

If a tax bill and a quiet month are heading your way, start by stopping money leaking out. Book a free card fee review and we'll go through your card statement with you. If you also need working capital, see our business finance options or card machines page.

Call or WhatsApp 07777 175890, or email sales@josfinserv.co.uk.

We are not tax advisers. For advice on your tax position, speak to your accountant or HMRC.

Jos Finserv Ltd (company no. 14560046) is an independent broker. For business finance we are a credit broker, not a lender, and we may receive commission from providers. Approval and terms depend on your trading history. No obligation.

Sources

• HMRC: Issue briefing, Direct Recovery of Debts (GOV.UK, updated June 2026)
• HMRC: What will happen if you do not pay your tax bill (GOV.UK)
• HMRC: Proposals to tackle lower value tax debts, consultation (GOV.UK)
• GOV.UK: If you cannot pay your tax bill on time
• Lewis Golden: Tackling lower value tax debts, Autumn Budget 2026
• City AM: Budget 2026, HMRC powers to chase tax debts