The greatest tax raid ever helps Rachel Reeves notch up a finances surplus… however Government borrowing remains to be at its fifth highest stage ever

On Feb 20, 2026

Published: 09:03, 20 February 2026 | Updated: 11:26, 20 February 2026

Rachel Reeves‘ tax hikes have helped her notch up a record budget surplus, according to official figures.

The Office for National Statistics (ONS) said there was a public sector net borrowing surplus of £30.4billion in January.

The rise was sparked by a jump in self-assessed tax payments and a fall in debt interest to the lowest level for almost six years.

It is the highest borrowing surplus – when the Government receives more in tax and other revenues than it spends – for any month since records began in 1993.

The surplus was also £6.3billion bigger than predicted by the Office for Budget Responsibility (OBR) and £15.9billion higher than the same month a year ago.

It came after the Chancellor’s tax receipts increased by £13.3billion to £109.7billion.

Meanwhile, borrowing in the financial year to January was £112.1billion – some £14.6 billion or 11.5 per cent less than in the same 10-month period a year ago.

But the ONS said this was still the fifth-highest April to January borrowing on record, when not adjusted for inflation.

Following announcements at her most recent Budget in November, Ms Reeves is set to push the UK’s overall tax burden to an all-time high by the end of the decade.

Rachel Reeves’ tax hikes have helped her notch up a record budget surplus, according to official figures

The Office for National Statistics ( ONS ) said there was a public sector net borrowing surplus of £30.4billion in January

Sir Mel Stride, the Conservatives’ shadow chancellor, said: ‘Labour have borrowed £112.1billion so far this year – the fifth highest borrowing on record.

‘Record high taxes and irresponsible spending have weakened the economy.

‘With youth unemployment now higher than in Europe, inflation above target and the economy stagnant, Wes Streeting is right: Labour have ‘no growth strategy’.’

British firms boost output – but job losses continue

Activity in the UK’s private sector has gained further momentum this month amid a rebound in demand at home and abroad, but job losses continued for the 17th month in a row, a new survey showed.

The S&P Global flash UK composite purchasing managers’ index (PMI), which is watched closely by economists, recorded a reading of 53.9 for February, up from 53.7 in January.

The flash figures are based on preliminary data. Any score above 50.0 indicates that activity is growing while any score below means it is contracting.

The PMI survey found that activity across the services sector strengthened during February, while factory output was boosted by a surge in export orders.

However, overall employment numbers fell for the 17th month in a row, led by a sharp reduction among services firms.

The Government brought in more tax revenue via capital gains tax, rising by £7billion to £17billion for the month, surpassing forecasts.

This increase was linked to a rise in capital gains tax for most assets in Ms Reeves’ first Budget in October 2024.

Friday’s data also showed that self-assessment income tax receipts lifted by £3.6billion to £29.4billion for January, again beating OBR forecasts.

Government spending edged slight lower – by £0.6billion – to £86.1billion for the month.

This was supported by a drop in debt interest costs, with recent falls in interest rates helping to bring these payments down by £5billion to £1.5billion – the lowest level since March 2020.

ONS chief economist Grant Fitzner said: ‘January – which is traditionally a strong month for self-assessed tax receipts – saw the highest surplus since monthly records began.

‘Revenue was strongly up on the same time last year, while spending was little changed, due to lower debt interest payments largely offsetting higher costs on public services and benefits.

‘Across the first 10 months of the current financial year, borrowing is lower than the same period a year ago.’

Nick Ridpath, research economist at the Institute for Fiscal Studies, said: ‘Today’s data on the public finances is particularly important, given the outsized impact of January’s self-assessment returns on revenues and borrowing for the year as a whole.

‘Income tax receipts had been a little disappointing over 2025, lagging behind forecasts even as inflation and wage growth exceeded expectations.

‘But today’s data shows that self-assessment revenues in January were almost £2billion (six per cent) higher than forecast.

‘The Government’s plan to run a current budget surplus from 2028-29 onwards is reliant on marked reductions in borrowing over the next few years – reductions that will be far easier to achieve if tax revenues continue to come in strongly.’

Following announcements at her most recent Budget in November, the Chancellor is set to push the UK’s overall tax burden to an all-time high by the end of the decade.

Ms Reeves is due to deliver her Spring Statement on March 3, with firms warning it is the Chancellor’s ‘last chance’ to act before they are hammered by new costs in April.

The Federation of Small Businesses has claimed their members are facing ‘unparalleled cost pressures’ due to rising energy bills, business rates hikes, increases in minimum wage rates, and changes to sick pay.

James Murray, Labour’s Chief Secretary to the Treasury, said: ‘We have the right plan to build a stronger, more secure economy.

‘We have doubled our headroom, we are bringing inflation down, we are making sure that taxpayers’ money is spent wisely, and borrowing this year is forecast to be the lowest since before the pandemic.’