Official figures from the Office for National Statistics (ONS) show that the UK’s public debt surplus was at its highest ever level in January, and this was driven by a £1.9 billion increase in self-assessment receipts and a £1.2 billion rise in Capital Gains Tax (CGT).
According to the ONS, income from taxes outstripped public spending by £14.9 billion, giving the Government its largest January surplus since records began in 1993. Combined, self-assessment receipts and CGT came to £21.4 billion in January, which was £3.1 billion more than the same month the year before.
High tax receipts were common in January, as this is when personal tax needs to be paid. However, the surplus was larger than expected, exceeding the £9.3 billion raked in last year and the £10 billion forecast by analysts.
While the figures are not necessarily a sign of a strengthening of the economy, as they relate to the 2017/18 tax year, they do mean that public sector borrowing is likely to be below the full-year Budget forecast made by the Office for Budget Responsibility (OBR).
This will give Chancellor Philip Hammond an estimated £2 billion of ‘fiscal headroom’ to draw on to stimulate the economy should he need to, depending on the Brexit outcome.
However, the ONS also reported that public sector net debt increased by £26.9 billion to £1.6 trillion in January, which is equal to 74 per cent of gross domestic product (GDP).