HMRC released their annual report for the year to 31 March 2025 last month, and it included some interesting insights into the UK’s overall tax burden and their plans to tackle it.
Total debt balance
HMRC’s total debt balance as of 31 March 2025 stood at £44.0 billion, consisting of £42.8 billion in tax debt and £1.2 billion in personal tax credit debt.
Before 2020, the tax debt balance generally fluctuated between £15–20 billion. COVID led to a significant increase in liabilities as HMRC’s recovery processes were paused. Whilst the tax debt has since stabilised, it remains more than double the level in March 2020.
14% of the total debt balance is currently in a Time to Pay (TTP) instalment arrangement. The amount in TTP arrangements has increased by £1 billion since 2022.
The below graph demonstrates the total HMRC tax debt and the proportion of TTP arrangements between FY20 and FY25.
By March 2025, over 913,000 tax payers were on TTP arrangements, an increase of 11,000 from the previous year.
Per HMRC’s statistics, over 90% of TTP plans are completed successfully.
Support and enforcement
HMRC is scaling up staffing with 2,400 additional debt management employees to improve engagement with customers.
The Autumn Budget 2024 and Spring Statement 2025 secured £629 million in additional funding for debt management, to be utilised as follows:
- £376 million to recruit/retain staff
- £87 million for partnerships with private sector collection agencies
- £154 million to modernise case management systems
- £12 million to expand use of credit reference data
This investment is projected to help HMRC recover over £11 billion more debt by 2029–2030.
Recent observations
The good news is that HMRC’s recent recruitment drive does appear to have resulted in some reduction in wait times on the Debt Management and Agent lines. However, the new staff will need time to skill up and gain the experience required to deal with complex tax matters and longer-term negotiations.
We’ve also seen a surge in enforcement action, including a significant increase in visits from HMRC’s Field Force officers. These visits can be particularly stressful for business owners and can sometimes lead to them agreeing to arrangements that aren’t viable in the long-term.
Whilst HMRC have generally been more proactive in recovering their debts, the Leonard Curtis business advisory team have achieved continued success in negotiating long-term arrangements with HMRC. Our dedicated team have enjoyed a 99% success rate in 2025 as of August, rescheduling £44m of debt across an average term of 38 months.
Leonard Curtis Time to Pay statistics YTD
For more information on the above, and our debt advisory offering, please contact Joe Douglas on joe.douglas@leonardcurtis.co.uk
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