The UK government has posted the biggest ever budget surplus, official figures show, after a large increase in self-assessment and capital gains tax receipts.
In a boost for the chancellor, Rachel Reeves, in the run-up to her spring statement next month, public sector finances recorded a surplus of £30.4bn at the start of the year, according to the Office for National Statistics. This was double the surplus recorded in January 2025.
The figure is the largest January total since records began in 1993 and much higher than the forecast of £24bn made by the Office for Budget Responsibility, the government’s official forecaster, and a poll of City economists.
Paul Dales, the chief UK economist at Capital Economics, said: “The economy started the year looking a lot healthier and will give the chancellor something positive to point to in her fiscal statement on 3 March.”
The figure marks a sharp reversal from December, when public sector net borrowing – the difference between spending and income – was £11.6bn.
Grant Fitzner, the chief economist at the ONS, said: “January – which is traditionally a strong month for self-assessed tax receipts – saw the highest surplus since monthly records began.
“Revenue was strongly up on the same time last year, while spending was little changed, due to lower debt interest payments largely offsetting higher costs on public services and benefits.”
Alongside the normal uplift to public finances in January from self-assessed tax receipts, this year has been boosted by a rise in capital gains tax receipts because of an increase in people disposing of assets before a widely expected rise in capital gains tax in the 2024 autumn budget.
Capital gains tax brought in £17bn last month, almost £7bn more than a year earlier, while self-assessed tax receipts reached a total of £29.4bn.
There has also been a freeze in income tax thresholds since 2022, meaning more people have been lifted into a higher tax bracket over time because of inflation.
The surplus meant that the deficit for the first 10 months of the year was £112.1bn, which is less than the £120.4bn the OBR had forecast, providing a bit more relief for the chancellor.
However, Henning Diederichs, a public sector senior technical manager at the Institute of Chartered Accountants in England and Wales, said the public finances continue to be in a difficult position before the spring statement despite the record surplus.
“The budget overrun remains significant, re-emphasising the weak economic position that is driving the government’s need to borrow,” he said.
Martin Beck, the chief economist at WPI Strategy, said that borrowing for the financial year was now expected to reach £130bn, which is “worrisome for an economy that both the OBR and the Bank of England judge to be close to full capacity”.
Reeves has made reducing government borrowing a priority, with the national debt hitting 92.9% of gross domestic product in January, a level not seen since the early 1960s. The cost of servicing that debt is high, with £1 in every £10 spent by the government going on debt interest.
James Murray, the chief secretary to the Treasury, said: “We have the right plan to build a stronger, more secure economy. We have doubled our headroom, we are bringing inflation down, we are making sure that taxpayers’ money is spent wisely, and borrowing this year is forecast to be the lowest since before the pandemic.”
