The UK government has posted the biggest ever budget surplus, official figures show, after a large boost 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 (ONS). This was £15.9bn higher than 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.
It 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.”
The surplus meant that the deficit for the first 10 months of the year is £112.1bn, which is less than the £120.4bn the OBR had forecast, providing a bit more relief for the chancellor.
The government traditionally records a surplus in January, meaning it earns more in tax revenue than it spends, because of the recording of self-assessment tax receipts in the month.
However, this year has been boosted by a rise in capital gains tax receipts because of an increase in people disposing of assets ahead of what they predicted would be a rise in capital gains tax in the 2024 autumn budget.
In her budget in October 2024, Reeves announced increases in the lower rate of CGT, from 10% to 18%, and the higher rate of CGT, from 20% to 24%, with these rate increases taking immediate effect.
There has also been a freeze in income tax thresholds since 2022, meaning more people had been lifted into a higher tax bracket over time because of inflation.
On top of these two factors, there have also been increases in national insurance contributions introduced last April and higher wage growth.
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.
“We know there is more to do to stop one in every £10 the government spends going on debt interest, and we will more than halve borrowing by 2030-31 so that money can be spent on policing, schools and the NHS.”
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.
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