The UK government recorded its largest monthly budget surplus on record in January, buoyed by soaring tax receipts and a sharp drop in debt interest payments, according to official data. Figures released on Friday 20 February showed that public sector revenues exceeded spending by £30.4 billion in January – the biggest surplus since monthly records began in 1993. The figure far surpassed City analysts’ expectations of £23.8 billion. January is traditionally a strong month for the public finances as households submit self-assessment tax returns. However, this year’s surplus was significantly higher than the £14.5 billion recorded in January 2025. A key factor behind the record figure was a steep fall in the government’s debt interest bill. Payments to investors holding government debt dropped to £1.5 billion in January, down from £9.1 billion in December. On the revenue side, total income rose nearly 14 per cent year-on-year to £133.3 billion. The increase was largely driven by a £12 billion rise in income tax receipts and a £2.9 billion boost in national insurance contributions, following higher payroll levies introduced for businesses last spring. The figures suggest the government’s fiscal position is stronger than expected compared with forecasts published by the Office for Budget Responsibility at the November Budget. The watchdog had projected borrowing of £120.4 billion in the ten months to January. In practice, borrowing totalled £112.1 billion – 11.5 per cent lower than a year earlier. Some recent government U-turns, including easing a planned rise in business rates for pubs and scaling back inheritance tax changes affecting farms and certain businesses, have reduced part of the chancellor’s £22 billion fiscal buffer. However, the recent decline in borrowing costs may have helped offset the impact of those policy reversals.