Public sector net borrowing in January 2023 was in surplus by £5.4bn, which was a £7.1bn smaller surplus than in January 2022 but £5.0bn larger than forecast by the Office for Budget Responsibility (OBR).
Figures from the Office for National Statistics showed self-assessed income tax receipts were £21.9bn in January 2023, which was the highest January figure since monthly records began in April 1999 and £5.5bn or one-third higher than in January 2022.
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January’s high annual self-assessed tax receipts were partly offset by substantial spending on energy support schemes and large one-off payments relating to historic customs duties owed to the EU.
Central government debt interest payable was £6.7bn in January 2023, which was the highest January figure since monthly records began in April 1997; the recent increases are largely because of the effect of Retail Prices Index (RPI) changes on index-linked gilts.
In the financial year-to-January 2023, the public sector borrowed £116.9bn, which was £7.0bn more than in the same period last year but £30.6bn less than forecast by the OBR.
Victoria Scholar, head of investment, interactive investor noted the figures were better than £7.85bn borrowing forecast.
“The big surprise here is the budget surplus run by the government in January, reflecting a jump in self-assessment income tax receipts which reached a record high.”
“However the surplus was £7.1bn less than in January 2022 and £2.9bn less than pre-covid in January 2020.”
And as Scholar pointed out, “The government still managed to achieve a surplus even after paying £10bn towards energy support for households and £2.3bn to the EU over a customs duties dispute.”
But as Danni Hewson, AJ Bell head of financial analysis commented anyone expecting tax cuts in the budget following these numbers was likely to be disappointed.
“January should be a month that sets the country’s finances up for the new year and when you compare the surplus with that generated last year, despite an increase in tax receipts, the picture doesn’t look quite so rosy and doesn’t bode well for anyone hoping to see a few a rabbits jump out of Jeremey Hunt’s hat next month,” she commented.