Britain posted its biggest budget surplus since before the financial crisis in January, as stronger tax receipts put Chancellor George Osborne firmly back on track to meet the Government's borrowing target this year.
The Government earned more in taxes than it spent in January, helping it to post a surplus of £8.8bn, excluding public sector banks. This surplus was up from £6.49bn in the same month a year ago, according to the Office for National Statistics (ONS).
January is traditionally the biggest of the year for tax receipts as self-employed workers and top rate taxpayers make payments for income earned in 2013-14.
While last month's surplus was slightly below economists' expectations of £9bn, it was the largest since January 2008 and means the Government has borrowed £74bn this fiscal year to bridge the gap between revenues and spending - £6bn less than in 2013-14.
“In a week of economic milestones, today we learn that January saw the largest monthly surplus in the public finances since the crisis, putting us on track to meet our borrowing forecasts and halve the deficit as a share of gross domestic product (GDP) this year," said Mr Osborne.
"Coming in a week where we have seen the employment rate reach record highs while the inflation rate has reached record lows, today’s good news is further proof that the government’s long term economic plan is working."
The Treasury's coffers were boosted this year as many employers delayed bonus payments until April 2013 to take advantage of the top rate of income tax cut being cut to 45pc in that fiscal year, from 50pc. Self-assessed income tax receipts in January were £12.3bn, an increase of £1.7bn - or 16pc - compared with January 2014.
Overall income tax receipts rose by 6pc, to £26.7bn. This means tax receipts are now 3.2pc higher this year, at £135.4bn.The ONS said further self-assessment receipts were expected to be recorded in February.
Corporation tax receipts also rose by 12.1pc, to £8.3bn in January, while VAT income rose 2.1pc, to £10.6bn. The ONS also revised down its borrowing estimates across the financial year, which included a £1.2bn refund from the European Commission on its £2.9bn EU budget payment in December.
This means the Government has borrowed £74bn this fiscal year to bridge the gap between revenues and spending - £6bn less than in 2013-14.
In order for the Government to achieve its borrowing target of £91.3bn this year, the deficit in February and March would have to match or come in below the actual shortfall of £17.3bn recorded in the same months last year.
Despite January's improvement, Britain's debt pile remains huge. Public sector net debt rose to £1.46 trillion in January, or 79.6pc of GDP. This is an increase of £86.1bn compared with January 2014. Economists welcomed the improvement in the public finances.
However, Samuel Tombs, an economist at Capital Economics, said the Government still faced a huge task to get its fiscal house in order.
"January’s public finance figures are likely to have brought a smile to the Chancellor’s face insofar as they show that the economic recovery is finally having a positive impact on the public purse," he said. "[However, recall that the Chancellor’s first Budget in 2010 anticipated that the deficit would be just £37bn this year.
As a result, the fiscal squeeze over the next five years will have to be intense, particularly in the early years of the next parliament, whichever party or parties are in power."
A rise in self-employment and low paid work has led to weaker tax receipts this year than originally forecast.
In December, the Office for Budget Responsibility (OBR), the Goverment's fiscal watchdog, revised up its borrowing forecast for the UK to £91.3bn, from a previous projection of £86.4bn. It also downgraded its projections for income tax receipts and national insurance revenues over the following four years.
telegraph.co.uk
The Government earned more in taxes than it spent in January, helping it to post a surplus of £8.8bn, excluding public sector banks. This surplus was up from £6.49bn in the same month a year ago, according to the Office for National Statistics (ONS).
January is traditionally the biggest of the year for tax receipts as self-employed workers and top rate taxpayers make payments for income earned in 2013-14.
While last month's surplus was slightly below economists' expectations of £9bn, it was the largest since January 2008 and means the Government has borrowed £74bn this fiscal year to bridge the gap between revenues and spending - £6bn less than in 2013-14.
“In a week of economic milestones, today we learn that January saw the largest monthly surplus in the public finances since the crisis, putting us on track to meet our borrowing forecasts and halve the deficit as a share of gross domestic product (GDP) this year," said Mr Osborne.
"Coming in a week where we have seen the employment rate reach record highs while the inflation rate has reached record lows, today’s good news is further proof that the government’s long term economic plan is working."
The Treasury's coffers were boosted this year as many employers delayed bonus payments until April 2013 to take advantage of the top rate of income tax cut being cut to 45pc in that fiscal year, from 50pc. Self-assessed income tax receipts in January were £12.3bn, an increase of £1.7bn - or 16pc - compared with January 2014.
Overall income tax receipts rose by 6pc, to £26.7bn. This means tax receipts are now 3.2pc higher this year, at £135.4bn.The ONS said further self-assessment receipts were expected to be recorded in February.
Corporation tax receipts also rose by 12.1pc, to £8.3bn in January, while VAT income rose 2.1pc, to £10.6bn. The ONS also revised down its borrowing estimates across the financial year, which included a £1.2bn refund from the European Commission on its £2.9bn EU budget payment in December.
This means the Government has borrowed £74bn this fiscal year to bridge the gap between revenues and spending - £6bn less than in 2013-14.
In order for the Government to achieve its borrowing target of £91.3bn this year, the deficit in February and March would have to match or come in below the actual shortfall of £17.3bn recorded in the same months last year.
Despite January's improvement, Britain's debt pile remains huge. Public sector net debt rose to £1.46 trillion in January, or 79.6pc of GDP. This is an increase of £86.1bn compared with January 2014. Economists welcomed the improvement in the public finances.
However, Samuel Tombs, an economist at Capital Economics, said the Government still faced a huge task to get its fiscal house in order.
"January’s public finance figures are likely to have brought a smile to the Chancellor’s face insofar as they show that the economic recovery is finally having a positive impact on the public purse," he said. "[However, recall that the Chancellor’s first Budget in 2010 anticipated that the deficit would be just £37bn this year.
As a result, the fiscal squeeze over the next five years will have to be intense, particularly in the early years of the next parliament, whichever party or parties are in power."
A rise in self-employment and low paid work has led to weaker tax receipts this year than originally forecast.
In December, the Office for Budget Responsibility (OBR), the Goverment's fiscal watchdog, revised up its borrowing forecast for the UK to £91.3bn, from a previous projection of £86.4bn. It also downgraded its projections for income tax receipts and national insurance revenues over the following four years.
telegraph.co.uk
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