The UK Government recorded a record £30.4 billion borrowing surplus in January, delivering an unexpected boost for Chancellor Rachel Reeves ahead of her forthcoming spring statement, official figures show.
Data from the Office for National Statistics (ONS) confirmed that public sector net borrowing swung into its highest monthly surplus since records began in 1993. A surplus occurs when government revenues exceed spending.
The figure was £6.3 billion higher than forecast by the Office for Budget Responsibility (OBR) and £15.9 billion greater than January last year.
The surplus was driven primarily by a sharp rise in tax receipts, particularly from self-assessment income tax and capital gains tax.
According to the ONS, central government tax receipts increased by £13.3 billion to £109.7 billion in January.
Capital gains tax revenue rose by £7 billion to £17 billion for the month, surpassing expectations. The increase follows changes announced in Labour’s autumn Budget in 2024, which raised capital gains tax on most assets.
Self-assessment income tax receipts also climbed by £3.6 billion to £29.4 billion, again exceeding OBR forecasts.
Government spending edged down slightly by £0.6 billion to £86.1 billion for the month.
A key factor was the sharp fall in debt interest payments, which dropped by £5 billion to £1.5 billion — the lowest level since March 2020 — as recent reductions in interest rates eased borrowing costs.
ONS chief economist Grant Fitzner 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.
“Across the first 10 months of the current financial year, borrowing is lower than the same period a year ago.”
The figures represent the final borrowing data before Reeves delivers her spring statement on 3 March, and suggest an improvement in the UK’s public finances.
Chief Secretary to the Treasury James Murray 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.”
However, the Opposition criticised the government’s broader borrowing record.
Sir Mel Stride MP, the shadow Chancellor, said: “Labour have borrowed £112.1 billion so far this year – the fifth highest borrowing on record.
“Record high taxes and irresponsible spending have weakened the economy.”
While January’s figures provide a significant headline surplus, economists caution that public finances remain under pressure from ongoing spending demands and slower economic growth.
Nevertheless, the record monthly surplus offers Chancellor Reeves a stronger platform as she prepares to outline the government’s fiscal strategy and economic priorities in the spring statement.