Government welcomes biggest tax surge since 2008, netting £8.8bn budget surplus

The tax boost puts the Chancellor on course to at least match the £91.3 billion borrowing target set by the Office for Budget Responsibility in December

The public coffers have received the most significant boost since the recession thanks to booming tax receipts, official figures have shown.

January, traditionally a good month for the Treasury because of corporation tax receipts and self-assessment income tax returns, saw a £8.8 billion surplus for the public finances, £2.3 billion bigger than the same month last year and the largest for seven years.

Experts said the tax boost, helped by a recovering economy, puts the Chancellor on course to at least match the £91.3 billion borrowing target set by the Office for Budget Responsibility in December.

Borrowing for the 10 months of the financial year to date is £74 billion, £6 billion below last year.

Capital Economics’ senior UK economist Samuel Tombs said: “January’s UK public finance figures should bring 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.”

The figures showed a 6.1 per cent rise in income tax payments to £26.7 billion in January while the corporation tax take jumped 12.1 per cent to £8.3 billion compared with last year.

This more than offset a 15 per cent fall in stamp duty to £718 million as the housing market cooled.

Economists cautioned that income tax receipts this January may have been flattered by high earners, who deferred bonuses into the 2013/14 year to take advantage of the cut in the top rate of income tax to 45 per cent.

 

But it leaves George Osborne only having to equal the combined £17.3 billion borrowing seen in February and March last year to match the deficit target.

IHS Global Insight’s Howard Archer said: “Given that the public finances and the fiscal plans of the major parties are going to be a major battleground in the forthcoming May general election, the Chancellor will be hoping that his standing is boosted by the public finances at least coming in on the revised target for 2014/15.”

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