The UK government recorded its largest ever budget surplus for January, helped by a sharp rise in tax receipts and slightly lower debt interest costs.
New figures show the public finances moved firmly into the black during the month. The data arrives just weeks before Chancellor Rachel Reeves is due to deliver her spring statement.
According to the Office for National Statistics, the public sector posted a surplus of £30.4bn in January. That was £15.9bn higher than the same month in 2025. It was also well above the £24bn forecast by the Office for Budget Responsibility and private sector economists.
January is usually a strong month for government finances because millions of people make self assessment tax payments. Even so, this was the highest January surplus since monthly records began in 1993.
The improvement marked a clear shift from December, when public sector net borrowing stood at £11.6bn.
The ONS said government income rose sharply compared with a year earlier, while overall spending remained broadly steady. Lower debt interest payments also helped support the surplus, offsetting higher spending in some areas such as public services and benefits.
Capital gains tax receipts were a major factor behind the stronger income. Many investors sold assets before tax increases announced in the October 2024 budget took effect. The lower rate of capital gains tax was raised from 10% to 18%, while the higher rate moved from 20% to 24%.
That change encouraged a wave of disposals, which boosted tax collections in the short term.
Other policies have also lifted revenue. Income tax thresholds have been frozen since 2022. As wages rise, more workers are pushed into higher tax bands. National insurance contributions were increased last April, adding further to government income.
Stronger wage growth across the economy has also increased overall tax receipts.
The healthier January figures helped reduce borrowing for the financial year so far. In the first 10 months of the year, the deficit reached £112.1bn. That is below the £120.4bn forecast by the Office for Budget Responsibility.
The lower borrowing gives the government slightly more room as it considers future policy decisions. Controlling borrowing remains a central priority as ministers aim to stabilise the public finances.
However, debt levels remain high. Public sector net debt stood at 92.9% of gross domestic product in January. That is the highest level since the early 1960s.
Debt servicing continues to weigh heavily on the budget. Around £1 in every £10 spent by the government goes towards interest payments.
The record January surplus reflects strong tax revenues and lower than expected borrowing. At the same time, elevated debt levels mean long term fiscal pressures have not disappeared.