Higher tax helped UK government reach record January surplus

"A surge in capital gains tax, employers' National Insurance contributions and a boost in income tax receipts helped buoy the government's finances last month. An uptick in tax receipts, which far outstripped spending, created a 30.4bn surplus in January. The Office for National Statistics (ONS) said it was the highest surplus in any month since records began in 1993, without adjusting for inflation, and nearly double last January's 15.4bn figure."

"A big upswing in capital gains tax receipts was a major factor in the uptick in government revenue, said Jason Hollands, managing director at wealth management firm Evelyn Partners. In January 2026, revenue from capital gains tax was nearly 17bn - 69% higher than in January 2025, he said, adding it was likely a reflection of investors disposing of assets since April 2024, ahead of an expected tax rise that came in the October 2024 Budget."

"The ONS said National Insurance contributions increased by 2.9bn in January, which also helped bump government income. It added that another factor for the January uptick was more money made from income tax, which came in at 3.6bn more than last January. The Treasury's freeze on income tax thresholds is dragging people in to paying higher tax rates as their incomes rise which aided the increase in income tax receipts, according to Paul Dales, chief economist at Capital Economics."

Tax receipts in January totaled 133.3bn, 13.8% higher than the previous January, creating a 30.4bn surplus. The surplus was the largest monthly surplus on record since 1993 and nearly double January 2025's 15.4bn. Capital gains tax receipts jumped sharply, with January 2026 CGT revenue nearly 17bn, 69% higher than January 2025, reflecting asset disposals ahead of an October 2024 Budget tax rise. Employers' National Insurance contributions increased by 2.9bn and income tax receipts were 3.6bn higher year-on-year, aided by frozen income tax thresholds that pull people into higher rates. Economists warned public finances remain finely balanced amid slow wage and economic growth.

Read at www.bbc.com