Uk Government Budget Surplus Hits Record £30.4bn in January, Giving Reeves a Boost

A uk government budget surplus of £30. 4bn was recorded in January, the largest monthly total since records began in 1993 and a sharp reversal from the previous month’s deficit. The jump, driven by unexpectedly strong tax receipts that far outstripped spending, gives Chancellor Rachel Reeves a tangible fiscal headline ahead of the Spring Statement in less than two weeks.

Uk Government Budget Surplus: What drove the jump

Official figures show tax receipts in January reached £133. 3bn, 13. 8% higher than the same month a year earlier. That uplift combined with relatively stable spending to create a surplus of £30. 4bn. The total is nearly double last January’s figure of £15. 4bn and surpasses several forecasts that had expected a substantially smaller surplus.

Key contributors included a large upswing in capital gains tax receipts, higher employers’ National Insurance contributions and an increase in income tax receipts. Capital gains tax revenue was nearly £17bn in January, a rise of about 69% on the prior January. Employers’ National Insurance contributions added roughly £2. 9bn more than a year earlier, while income tax receipts were around £3. 6bn higher than last January.

Tax components and the wider fiscal picture

The uk government budget surplus was concentrated in January, a month that typically benefits from self-assessed tax payments. This year’s self-assessment and capital gains receipts amplified the usual seasonal boost. Analysts had been expecting a smaller surplus — around £23. 8bn — and an official forecast near £24bn, so the outturn marks a notable upside surprise for public finances.

Borrowing for the 10 months to January stood at £112. 1bn, which is 11. 5% lower than in the same period a year earlier, though it remains among the higher totals for that span on record. Officials suggest that borrowing for the year ahead is expected to be lower than in recent years, with forecasts pointing towards a return to pre-pandemic levels in due course.

Implications for policy and what comes next

The surge in receipts gives the chancellor a positive data point to reference ahead of the Spring Statement, but economists caution that the public finances remain finely balanced. The January result reflects timing and one-off factors such as asset disposals ahead of anticipated tax changes, rather than sustained strength across the whole economy.

Policymakers will weigh whether the January surplus materially alters the fiscal trajectory for the year or simply narrows borrowing by a limited amount. While the surplus reduces pressure on near-term borrowing projections, commentators note that broader economic indicators and spending pressures will determine whether the improvement is durable.

• January tax receipts: £133. 3bn (13. 8% higher year-on-year)
• January capital gains tax: nearly £17bn (around 69% higher year-on-year)
• Ten-month borrowing: £112. 1bn (11. 5% lower year-on-year)

Recent data will shape the forthcoming Spring Statement, but officials and analysts alike warn against over-interpreting a single-month outcome. The record January surplus provides an important short-term reprieve and a political boost, yet the durability of this improvement will hinge on tax receipts later in the financial year and the path of public spending.