Businesses in the UK are facing increasing financial strain, with new data from HM Revenue & Customs (HMRC) showing that tax arrears have hit £28 billion per month on average across the first quarter of 2025.

Unpaid Corporation Tax, VAT and PAYE liabilities are growing, and recent increases to National Insurance contributions (NICs) are expected to deepen the problem.

Corporation Tax, VAT and PAYE debts reach new highs

Freedom of Information data released by HMRC reveals the extent of the issue:

• Corporation Tax debt stood at £7.52 billion in January, £7.14 billion in February and £6.79 billion in March
• Unpaid VAT liabilities averaged £12 billion per month, peaking at £12.55 billion in February
• PAYE and employer NICs arrears came in at over £8 billion per month across the quarter

These figures are likely to rise as we see the impact of the increase of employer NI rates (13.8 per cent to 15 per cent), combined with a lower threshold.

At the same time, businesses are contending with weakened cash flow due to US tariffs and mixed trade conditions.

Risks of falling behind on tax payments

Missed or late payments to HMRC can quickly escalate into a serious financial risk.

Enforcement action, penalties and interest charges can all have long-term consequences.

On top of this, businesses under financial stress may find it harder to secure funding or maintain supplier confidence.

Steps businesses can take to manage tax liabilities

There are several practical steps businesses can implement to reduce the risk of falling into tax debt:

• Improve cash flow forecasting to prepare for upcoming tax obligations
• Maintain accurate, real-time financial records to support decision-making
• Engage with HMRC early if arrears are building, Time to Pay arrangements can ease pressure

Professional advice can prevent long-term damage

As tax rules change and economic pressures mount, businesses need strategic financial guidance.

We work with companies of all sizes to assess tax exposure, improve financial management, and negotiate with HMRC where necessary.

If you are unsure about your tax position, or already feeling overwhelmed by growing liabilities, the most important step is to seek advice now, not after a penalty notice arrives.

The figures may look daunting, but they are avoidable with the right support.

Speak to us today to take the pressure off your tax obligations and protect the future of your business.