The UK government recorded its largest ever budget surplus in January, official figures show, providing a boost for Chancellor Rachel Reeves ahead of the spring statement. Public sector finances showed a surplus of £30.4bn, double the amount recorded in January 2025 and the highest monthly total since records began in 1993, according to the Office for National Statistics (ONS).
The figure was well above the £24bn forecast by the Office for Budget Responsibility and a survey of City economists, and marks a sharp reversal from December’s deficit of £11.6bn. The ONS said revenue was strongly up on the same time last year, while spending was little changed, with lower debt interest payments offsetting higher costs on public services and benefits.
The surplus was driven by a large increase in self-assessment and capital gains tax receipts. Self-assessment tax receipts reached £29.4bn, while capital gains tax brought in £17bn, nearly £7bn more than a year earlier, partly due to people disposing of assets before expected tax rises. A freeze on income tax thresholds since 2022 has also pushed more people into higher tax brackets.
As a result, borrowing for the first 10 months of the financial year fell to £112.1bn, below the OBR’s forecast of £120.4bn, suggesting the full-year borrowing could undershoot by about £10bn. However, economists cautioned that the public finances remain difficult. Martin Beck at WPI Strategy said borrowing for the year was still 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”.
The record surplus comes amid mixed economic data. Growth in the final quarter of last year was a disappointing 0.1%, while unemployment rose to a five-year high of 5.2%. Inflation slowed to 3% in January, the lowest since March, boosting hopes for interest rate cuts. Debt interest payments fell to £1.5bn, about £5bn less than a year ago, helping to ease pressure on the national debt, which stands at £2.9tn, equivalent to 92.9% of GDP.
