Spring Statement 2025: HMRC’s to receive new funding for debt collection

Matt Taylor and Chris Etherington, partners at RSM UK comment on the Spring Statement.

There were no tax rise surprises in the Spring Statement but the chancellor is banking on being able to collect more that is already owed by taxpayers to balance the books.  

Amongst the detailed documents supporting the Spring Statement is a proposal to provide additional funding from 6 April 2025 to external debt collection agencies to recover unpaid taxes. That is expected to raise an additional £600m in the 2029/30 financial year, an estimate based on current recovery rates by collection agencies.  

In addition, it is hoped that a further £150m will be raised by increasing the numbers of debt staff and an additional £95m from recruiting new compliance staff at HMRC. Other revenue raising measures include increasing the penalties that will be charged to those who do not meet their obligations in relation to Making Tax Digital for VAT and Income Tax Self Assessment. 

On the face of it, a renewed focus on trying to collect more from those who haven’t paid their taxes or filed their returns on time might be seen as more of a stick than a carrot approach. Clearly there are challenges in navigating the tax system and there is still more to do in helping taxpayers with their queries.  

HMRC recently released statistics for January 2025, highlighting how they are performing against their targets, including customer satisfaction and contact volumes. There had been a steady improvement in the calls answered since April 2024, but these figures declined rapidly in January 2025. Around 2.2million callers requested to speak to an adviser in January 2025, of which HMRC answered 72.9%. This means that almost 600,000 calls were not answered in the month where Self-Assessment income tax receipts were the highest on record.  

There is a clear need for HMRC to receive additional support and funding to help reduce the debts due to it. As we have previously highlighted, the Committee of Public Accounts has recently highlighted their concerns with the levels of debt due to HMRC, with suggestions that £20bn of the £43bn debt outstanding at 31 March 2024 may not be recoverable at all. 

The levels of HMRC debt are substantially higher than they were prior to the pandemic and it is a positive step to see the government taking active steps to try and remedy this as it was clearly needed. The measures announced may give some taxpayers pause for thought. The key for many will be ensuring they engage with HMRC in settling overdue debts but further steps by HMRC are also needed to make it easier for taxpayers to get their taxes right in the first place.