The UK recorded a £30.4 billion budget surplus in January 2026, the largest monthly surplus since comparable records began in 1993.
The outturn exceeded the Office for Budget Responsibility’s forecast and reflects stronger-than-expected tax receipts at the start of the calendar year.
Why January’s Surplus Was So High
January is traditionally a high-revenue month because of self-assessment income tax payments. This year’s figure was materially above expectations, driven in part by elevated income tax and capital gains tax receipts.
PAYE collections remain strong, and there are indications that some taxpayers accelerated asset disposals ahead of anticipated tax changes and ongoing threshold freezes.
While January is typically a surplus month for the public finances, the scale of this year’s figure was significantly above forecast. The result provides the Treasury with stronger short-term fiscal headroom ahead of the Spring statement.
Short-Term Boost, Longer-Term Constraints
Despite the record surplus, the broader fiscal position remains constrained. Public sector net debt remains elevated relative to GDP, and debt interest payments continue to represent a substantial and persistent cost to the Exchequer.
A single month’s outturn does not establish a structural improvement in the public finances. January receipts are often influenced by timing effects and taxpayer behaviour, particularly around capital gains realisations.
The central question is whether revenue performance continues to exceed expectations over subsequent months. Sustained overperformance could influence the Government’s fiscal choices later in the year. If receipts revert to forecast levels, the January surplus is likely to be treated as a timing effect rather than evidence of a longer-term shift.
Further detail on the public finance outlook is expected at the upcoming Spring statement.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
