Public sector finances, UK: January 2025

• Each January, tax receipts are always higher than in other months, because of receipts from self-assessed taxes; this often leads to a surplus whereby income exceeds expenditure rather than borrowing. 

• Initial estimates show that the public sector was in surplus by £15.4 billion in January 2025; this was a £0.8 billion larger surplus than last year, and the highest January surplus since monthly records began in 1993. 

• The current budget balance - receipts less the cost of day-to-day public sector activities - was in surplus by £24.6 billion in January 2025; this was a £0.7 billion larger surplus than last year and the highest January budget surplus since monthly records began in 1997. 

• Combined self-assessed income and Capital Gains Tax receipts were provisionally estimated at £36.2 billion in January 2025, £3.8 billion more than a year earlier, and the highest January receipts since monthly records began in 1999. 

• Borrowing in the financial year to January 2025 was £118.2 billion; this was £11.6 billion more than at the same point in the last financial year and the fourth-highest financial year-to-January borrowing since monthly records began in 1993. 

• Public sector net debt excluding public sector banks was provisionally estimated at 95.3% of gross domestic product (GDP) at the end of January 2025; this was 0.1 percentage points more than at the end of January 2024, and remains at levels last seen in the early 1960s. 

• Public sector net financial liabilities excluding public sector banks were provisionally estimated at 82.7% of GDP at the end of January 2025; this was 2.0 percentage points more than at the end of January 2024, but 12.6 percentage points less than for public sector net debt. 

• Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was in surplus by £15.2 billion in January 2025, a £4.3 billion smaller surplus than in January 2024; see Annington Homes in Section 11: Data sources and quality.

In January 2025, initial estimates show that the public sector received more in taxes and other income than it spent, leading to a surplus of £15.4 billion. 

This was a £0.8 billion greater surplus than in January 2024 and the highest January surplus since monthly records began in January 1993. 

However, this was a £5.1 billion smaller surplus than the £20.5 billion forecast for January 2025 by the Office for Budget Responsibility in October 2024.

Public sector borrowing consists of two broad components: the current budget and net investment. 

The current budget, which is usually in deficit, can be considered as borrowing to fund day-to-day public sector activities. Initial estimates show that in January 2025, the current budget was in surplus by £24.6 billion. This was a £0.7 billion greater surplus than in January 2024 and the highest January surplus since monthly records began in 1997. 

The public sector's net (capital) investment was £9.1 billion in January 2025, £0.1 billion less than in January 2024.

A breakdown of net borrowing by subsector and a summary of central government receipts and expenditure data are presented in Tables 1 to 3 in our Public sector finances summary tables: Appendix M dataset. 

Central government borrowing 

Central government forms the largest part of the public sector and includes government departments such as HM Revenue and Customs, the Department of Health and Social Care, the Department for Education, and the Ministry of Defence, as well as other government agencies. 

The relationship between central government's receipts and expenditure is an important determinant of public sector net borrowing. Central government was in surplus by £13.8 billion in January 2025, around 90% of the £15.4 billion surplus of the whole public sector. 

Central government current receipts 

Central government's receipts were £117.6 billion in January 2025, £7.8 billion more than in January 2024. Of this £7.8 billion increase in income: 

• central government tax receipts increased by £7.7 billion to £97.0 billion; this included increases of £6.9 billion in Income Tax and £0.4 billion in Corporation Tax, with Value Added Tax (VAT) receipts largely unchanged 

• compulsory social contributions decreased by £0.2 billion to £14.5 billion 

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset. 

Self-assessed tax receipts 

Each January, accrued receipts are always higher than in other months, because of self-assessed (SA) taxes. 

In January 2025, SA Income Tax receipts have been provisionally estimated at £25.9 billion, £4.2 billion more than in January 2024, but £3.0 billion less than the £28.9 billion forecast by the Office for Budget Responsibility (OBR) in October 2024. 

SA Capital Gains Tax receipts have been provisionally estimated at £10.3 billion, £0.3 billion less than in January 2024 and £1.1 billion less than the £11.4 billion forecast by the OBR in October 2024. 

Tax payments made close to the deadline, and the time taken for those to then appear in administrative data, mean that the proportion of self-assessed taxes recorded in January and February can vary year-on-year. Therefore, it is advisable to consider these two months together when making annual comparisons. 

Further detail is available in HMRC tax receipts and National Insurance contributions for the UK on the GOV.UK website. 

Central government current expenditure 

Central government spending data for January 2025 are provisional. There is uncertainty around these estimates until more detailed departmental information becomes available later in the financial year. 

Central government's total expenditure was £103.8 billion in January 2025, £1.8 billion more than in January 2024. Of this overall £1.8 billion increase in spending: 

• central government departmental spending on goods and services increased by £2.6 billion to £36.8 billion, as pay rises and inflation increased running costs 

• net social benefits paid by central government increased by £2.5 billion to £26.2 billion, largely caused by inflation-linked increases in many benefits and pensions 

• interest payable on central government debt increased by £2.0 billion to £6.5 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI) 

• payments to support the day-to-day running of local government increased by £0.8 billion to £11.5 billion; these intra-government transfers are both central government spending and a local government receipt, so they have no effect on overall public sector borrowing 

Central government net investment 

Central government net investment was £13.7 billion in January 2025, £6.2 billion less than in January 2024. 

This decrease was largely because of a £5.8 billion reduction in the quarterly payment from HM Treasury to the Bank of England (BoE) Asset Purchase Facility (APF) Fund compared with a year earlier. 

These intra-public sector transfers have no impact on overall public sector borrowing because they are recorded as both central government spending and Bank of England receipts. 

Interest payable on central government debt 

The interest payable on central government debt was £6.5 billion in January 2025. 

This was £2.0 billion more than in January 2024 and was the highest January interest payable since 2023, when it was £6.9 billion, and the second-highest January figure since monthly records began in 1997.

The large monthly changes in the Retail Prices Index (RPI) since early 2021 have led to considerable volatility in debt interest payable, with the largest three months on record occurring in 2022 and 2023. The additional interest caused by RPI inflation is described as "capital uplift" and affects the value of the gilt principal. 

Capital uplift was £0.4 billion in January 2025, largely reflecting the 0.1% increase in the RPI between October and November 2024. This increased the capital uplift on the three-month lagged index-linked gilts, which make up around 95% of the index-linked gilt stock, as described by the UK Debt Management Office. 

A monthly time series of capital uplift on the index-linked gilts in issue is available as series identifier code JNYY. Figure 2 shows this series as the blue (lighter) portion of each bar and excludes the uplift payable at the time of an index-linked gilt redemption. These redemption payments are already recorded as accrued interest payable across the life of each index gilt. 

For further details of our approach, see our methodology article on Calculation of interest payable on government gilts.

Monthly receipts and expenditure figures can be volatile, so the year-to-date position provides a better indicator of progress against previous years and the forecast. 

The public sector spent more than it received in taxes and other income in the financial year (FY) to January 2025. Initial estimates show it was required to borrow £118.2 billion, £11.6 billion more than was borrowed in the FY to January 2024. 

This was the fourth-highest FY to January borrowing since monthly records began in 1993, behind those of the equivalent 10-month period of the FY to January 2021 during the coronavirus (COVID-19) pandemic, and in the FY to January 2010 and the FY to January 2011 following the global financial downturn. 

Borrowing in the FY to January 2025 was £12.8 billion more than the £105.4 billion forecast by the Office for Budget Responsibility in October 2024. Of this, central government and local government borrowing were, respectively, £8.1 billion and £4.2 billion above OBR forecast amounts.

Within public sector borrowing in the FY to January 2025, the current budget deficit was £64.8 billion, £3.8 billion more than in the same period a year ago. 

Public sector net investment increased by £7.8 billion to £53.4 billion for the same 10-month period.

A breakdown of net borrowing by subsector and a summary of central government receipts and expenditure data are presented in Tables 1 to 3 in our Public sector finances summary tables: Appendix M dataset. 

Central government borrowed £132.5 billion of the £118.2 billion borrowed by the public sector (excluding public sector banks) in the FY to January 2025. This larger central government borrowing was partially offset by a £17.8 billion Bank of England (BoE) surplus and balanced by remaining subsectors. 

Payments totalling £36.3 billion made by central government to the BoE in this period under its Asset Purchase Facility (APF) Fund indemnity agreement affected the borrowing of both subsectors. As with similar intra-public sector transactions, these payments are public sector borrowing neutral. They increased central government's borrowing by £36.3 billion in the FY to January 2025, but reduced the borrowing impact of the BoE by an equal and offsetting amount.

Central government current receipts 

Central government's current receipts were £854.1 billion in the FY to January 2025, £31.4 billion more than in the same period last year. Of this £31.4 billion increase in income: 

• central government tax receipts increased by £36.1 billion to £654.8 billion, with increases in Income Tax, Corporation Tax and Value Added Tax (VAT) receipts of £24.0 billion, £5.0 billion and £2.7 billion, respectively 

• compulsory social contributions decreased by £7.9 billion to £139.8 billion, largely because of the reductions in the main rates of National Insurance in early 2024 

A detailed breakdown of central government income is presented in our Public sector current receipts: Appendix D dataset.

Central government current expenditure 

Central government's total expenditure was provisionally estimated as £986.6 billion in the FY to January 2025, £37.1 billion more than in the same 10-month period a year ago. Of this overall £37.1 billion increase in spending: 

• central government departmental spending on goods and services increased by £21.8 billion to £358.0 billion, as pay rises and inflation increased running costs 

• net social benefits paid by central government increased by £13.2 billion to £256.1 billion, largely caused by inflation-linked increases in many benefits 

• payments to support the day-to-day running of local government increased by £9.3 billion to £121.1 billion; these intra-government transfers have no impact on overall public sector borrowing (PSNB ex) 

• interest payable on central government debt decreased by £1.3 billion to £73.8 billion, largely because the interest payable on index-linked gilts rises and falls with the Retail Prices Index (RPI) 

• subsidies paid by central government decreased by £3.4 billion to £24.0 billion, largely because of the closure of the energy support schemes that were active until June 2023 

• net current grants abroad decreased £4.8 billion to £6.0 billion, largely because of smaller net payments made to the EU

Central government net investment 

Central government net investment in the FY to January 2025 was £94.0 billion, £3.4 billion less than at the same point in the last financial year. This £94.0 billion includes £36.3 billion in regular payments from HM Treasury to the BoE APF Fund. These intra-public sector transfers have no impact on overall public sector borrowing (PSNB ex).

Local government 

Initial estimates suggest that local government borrowing was £7.0 billion in the 10 months to January 2025. This was £1.1 billion lower than in the same period a year earlier. Our provisional monthly estimates for the UK are currently based on published budget data for England, Scotland and Wales, with estimates included for Northern Ireland.

The public sector borrowed £131.3 billion in the financial year ending (FYE) March 2024. This was £8.1 billion more than the £123.3 billion borrowed in FYE March 2023, and £9.4 billion more than the £121.9 billion forecast by the Office for Budget Responsibility.

Expressing borrowing as a ratio of gross domestic product (GDP)- the value of everything produced in the UK economy in a 12-month period - gives an estimate of its affordability and provides a more thorough and reliable measure for comparison of the UK's fiscal position over time. 

Our current estimate for the total borrowed in the financial year ending (FYE) March 2024 as a ratio of GDP was 4.8%. This is 0.4 percentage points higher than our initial estimate of 4.4% published in our March 2024 release.

We describe the methodology used for the presentation of our GDP ratios in our methodology article The use of GDP in public sector fiscal ratio statistics.

The public sector balance sheet describes its financial position at a point in time. It shows its liabilities (amounts owed) and its assets (amounts owned). 

There are several measures of the public sector balance sheet that we discuss in our What the UK government owns and what it owes blog. 

Table 3 presents the narrowest balance sheet measure, which is the redemption value of central government gilts. It then builds on this measure, widening coverage by both the subsector and the range of asset and liability types included, to reach the far wider measure of public sector net worth. We explain this measure in our Wider measures of the public sector balance sheet: public sector net worth methodology.

Our Public sector balance sheet tables: Appendix N dataset presents a detailed reconciliation between the balance sheet measures summarised in Table 3. 

Public sector net debt 

Public sector net debt excluding public sector banks (PSND ex) is the most widely used balance sheet measure used to describe the UK public sector's financial position at a point in time. Expressing net debt as a ratio of gross domestic product (GDP) gives an estimate of its affordability, and provides a more thorough and reliable measure for comparison of the UK's fiscal position over time. 

The net debt-to-GDP ratio at the end of January 2025 was provisionally estimated at 95.3%, 0.1 percentage points higher than a year ago. However, this is a highly provisional estimate and is likely to be revised in future publications because it partly relies on GDP estimates based on the October 2024 Office for Budget Responsibility forecast. Our blog explains why our estimates of the debt to GDP ratio are susceptible to revision.

Public sector net debt excluding the Bank of England (BoE) was £2,604.1 billion at the end of January 2025, or around 89.3% of GDP. This was £173.7 billion, or 6.0 percentage points of GDP, less than the wider measure of net debt (including the BoE). This difference was largely a result of the BoE's quantitative easing activities, including the gilt-purchasing activities of the Asset Purchase Facility (APF) Fund. 

The APF Fund's gilt holding is not recorded directly as a component of public sector net debt. Instead, in January 2025, we recorded the £100.7 billion difference between the £651.7 billion of reserves created to purchase its gilts (at market value at the time of purchase) and their £551.0 billion redemption value.

For details of the BoE's contribution to public sector net debt, see Table PSA9A of our Public sector finances tables 1 to 10: Appendix A dataset.

Public sector net financial liabilities 

Public sector net financial liabilities excluding public sector banks (PSNFL ex) were £2,411.9 billion at the end of January 2025, which was equivalent to an estimated 82.7% of GDP. This was £159.6 billion, or 2.0 percentage points, more than at the end of January 2024. 

PSNFL ex adds further assets and liabilities to those recorded in debt (PSND ex). These extra assets are currently valued at more than the extra liabilities. This means that PSNFL ex was 12.6 percentage points of GDP less than PSND ex, which stood at 95.3% of GDP at the end of January 2025. 

On 30 October 2024, we published an explanation of the financial assets and liabilities captured in PSNFL ex in our PSNFL methodology. Additionally, we published a blog explaining the PSNFL measure, because it has been selected by the UK government as the reference for a balance sheet fiscal rule.

Our Public sector balance sheet tables: Appendix N presents a reconciliation between PSND ex and PSNFL ex, in the context of the balance sheet measures summarised in Table 3. 

The additional assets and liabilities included in PSNFL ex that fall outside of the PSND ex boundary are not updated monthly. Instead, they are updated quarterly, or when data become available. These data were last updated on 20 December 2024. 

A more detailed presentation of the public sector balance sheet is available in our Public sector net worth: Appendix O dataset, released on 20 December 2024.

The data for the latest months of every release contain a degree of forecasts. These are then replaced by improved estimates, as further data are made available, and finally by outturn data. 

Tables 4 to 6 of our Public sector finances summary tables: Appendix M dataset compare our latest public sector finances data with those in our Public sector finances, UK: December 2024 bulletin, published on 22 January 2025. They highlight the revisions to borrowing by subsector, with additional detail for central government receipts and expenditure. 

Our Public sector finance revisions analysis: Appendix P dataset records monthly borrowing data as at first and at subsequent publications, graphically illustrating any potential bias to our early estimates. 

Revisions to public sector net borrowing in the financial year to December 2024 

We have increased our estimate of public sector net borrowing (PSNB ex) in the first nine months of the financial year by £3.7 billion to £133.6 billion since publishing our December 2024 release. This is because of regular updates to our central government data. 

Also, this month we have reduced our previous estimate of central government tax receipts by £2.5 billion, largely because of decreases in Corporation Tax receipts of £2.3 billion and Value Added Tax (VAT) receipts of £0.5 billion. These decreases were slightly offset by an increase to our previous estimate of Income Tax receipts of £0.2 billion. 

For the same nine-month period, we have increased our previous estimate of total central government spending by £2.6 billion. Most notably, we have increased our previous estimate of spending on debt interest payable by £2.3 billion to reflect the latest source data. 

We have made several other smaller changes to our provisional spending estimates, again to reflect the latest source data. Of these, we have increased our previous estimate of central government net investment by £0.4 billion. This now includes a £0.7 billion capital transfer paid to the private sector in December 2024 to account for repayments following a ruling from the Court of Justice of the European Union on UK taxation of controlled foreign companies. 

Revisions to public sector net borrowing in earlier financial years 

We have increased our estimate of borrowing in the financial year ending March 2024 by £0.3 billion to £131.3 billion, since publishing our December 2024 release. This change was because of updates to previous Corporation Tax estimates. 

Revisions to public sector net debt (PSND ex) at the end of December 2024 

We have reduced our estimate of debt at the end of December 2024 by £2.9 billion to £2,822.2 billion since publishing our December 2024 release. This change was largely because of updated Bank of England data, some of which are published one month in arrears. 

Revisions to gross domestic product 

This month we have updated our previous estimates of nominal gross domestic product (GDP) with those published in our GDP first quarterly estimate, UK: October to December 2024 bulletin, published on 13 February 2025. 

GDP in the most recent periods was lower than previously estimated, meaning that this update has increased our published estimates of debt expressed as a ratio of GDP by between 0.1 and 0.2 percentage points from November 2023 to date.

Public sector 

In the UK, the public sector consists of six subsectors: central government, local government, public non-financial corporations, public sector funded pensions, the Bank of England (BoE) and public financial corporations (including public sector banks). The figures presented in this release exclude public sector banks unless otherwise noted. 

The NatWest Group, the only remaining public sector bank, was reclassified to the private sector as of June 2024. 

Public sector current budget deficit 

Public sector current budget deficit (PSCBD) is the gap between current expenditure and current receipts on an accruals basis, having taken account of depreciation. PSCBD is effectively an estimate of borrowing to fund day-to-day public sector activities and is the reference statistic used for a UK government fiscal rule. 

The current budget is in surplus when receipts are greater than expenditure and is indicated with a negative sign. 

Public sector net borrowing 

Public sector net borrowing (PSNB) is the gap between total expenditure and current receipts on an accruals basis. If receipts exceed expenditure, this is referred to as a surplus and is indicated with a negative sign. Borrowing is often referred to by commentators as "the deficit". 

Public sector current budget deficit and net borrowing are measured on an accruals basis, where transactions for income are recorded when earned and expenses are recorded when incurred, rather than when the bills are paid (on a cash basis). 

Central government net cash requirement 

The central government net cash requirement (CGNCR) represents the cash needed to be raised from the financial markets over a period to finance its activities. The amount of cash required will be affected by changes in the timing of payments to and from the public sector, rather than when these liabilities were incurred. 

Public sector net debt 

Public sector net debt (PSND), often referred to by commentators as "the national debt", represents the amount of money the public sector owes to the private sector and overseas (in the form of loans, debt securities, deposit holdings and currency), net of liquid financial assets held. 

Public sector net financial liabilities 

Public sector net financial liabilities (PSNFL) isa wider measure of the balance sheet than public sector net debt and includes all financial assets and liabilities recognised in the national accounts. PSNFL is the reference statistic used for a UK government fiscal rule and is sometimes referred to as "net financial debt". 

Broadening the PSNFL measure to include the public sector's non-financial assets provides public sector net worth (PSNW), our widest balance sheet measure.

Methodology guides 

To supplement this release, we publish an accompanying methodological guide and quality and methodology information (QMI)outlining the strengths, limitations, and appropriate uses of government finance statistics. 

We also explain the recording of interest payable to holders of UK government gilts in the UK public sector finances in our Calculation of interest payable on government gilts methodology and our Use of gross domestic product (GDP) in public sector fiscal ratio statistics methodology. 

Accredited official statistics 

Public sector net borrowing, cash requirement and debt are accredited official statistics. These accredited official statistics were independently reviewed by the Office for Statistics Regulation in June 2017. They comply with the standards of trustworthiness, quality, and value in the Code of Practice for Statistics and should be labelled "accredited official statistics". 

Official statistics 

Public sector net financial liabilities and public sector net financial worth are both official statistics. These measures were introduced after June 2017, and so have not yet been reviewed by the Office for Statistics Regulation. 

Official statistics in development 

Public sector net worth is labelled as "official statistics in development". Until October 2023, these were called "experimental statistics". Read more about the change in our Guide to official statistics in development. 

Tax receipts and social contributions 

In the most recent months, tax receipts recorded on an accrued basis are subject to some uncertainty. This is because many taxes such as Value Added Tax (VAT), Corporation Tax, and Pay As You Earn (PAYE) Income Tax contain some forecast cash receipts data and are liable to revision when actual cash receipts data are received. 

The forecasts underlying our current tax estimates reflect the expectations published in the Office for Budget Responsibility's (OBR's) Economic and fiscal outlook - October 2024 report. 

Value Added Tax 

In August 2024, HM Revenue and Customs (HMRC) advised that annual Value Added Tax (VAT) receipts for the financial year ending (FYE) March 2023 and the FYE March 2024 had not been aligned to their annual accounts while ongoing assurance was carried out. 

In our Public sector finances, UK: July 2024 bulletin we advised that VAT receipts over this period should be treated as provisional and that we would inform users when HMRC's assurance process was complete. 

This month, HMRC has advised us that this assurance work was complete and that they expect to reduce previously reported VAT cash receipts for the FYE March 2023 and the FYE March 2024. This change will be reported in our Public sector finances, UK: February 2025 bulletin to be published on 21 March 2025. 

Further briefing and the expected impact of this change is available in HMRC tax receipts and National Insurance contributions for the UK on the GOV.UK website. 

Total cash tax receipts paid by HMRC to HM Treasury are unaffected by this update and therefore central government net cash requirement will not change. However, we expect public sector net borrowing to increase in the FYE March 2023 and the FYE March 2024. Additionally, there will be a revision in borrowing in the FYE March 2022 because of the timing adjustments applied to our cash receipts data. 

Changes to National Insurance contributions 

The UK government announced changes to the National Insurance contributions paid by employers in the Autumn Budget 2024. This change comes into effect from 6 April 2025. 

Annington Homes 

In December 2024, we recorded the UK government repurchase of 36,347 military homes from Annington Homes at a cost of £6.0 billion. Reflecting international statistical guidance, this purchase was recorded in December 2024, according to the date of the agreement. This month we have recorded the accompanying cash transaction, which has increased central government net cash requirement by £6.0 billion in January 2025. 

Local government 

Local government data for the financial year ending (FYE) March 2025 are provisional estimates for the UK. They are largely based on published budget data for England, Scotland and Wales, with estimates included for Northern Ireland. 

In recent years, planned local government expenditure initially reported in local authority budgets has been systematically lower than final outturn current expenditure reported in the audited accounts, and generally higher than that reported in final outturn capital expenditure. Therefore, we may include adjustments to increase or decrease the amounts reported at the budget stage. 

For FYE March 2024, we include a £0.5 billion downward adjustment to Scotland's capital expenditure. 

For FYE March 2025, we include a £3.0 billion upward adjustment to England's current expenditure. 

To reflect the most recently available data for housing benefits, we have applied further downward adjustments to budget data for current expenditure on benefits of £0.2 billion in FYE 2024 and £1.6 billion in FYE 2025. 

Public corporations 

Data for public corporations in FYE 2024 are largely based on the OBR's Economic and fiscal outlook - October 2024 report, and are supplemented by in-year estimates for train operating companies, the Housing Revenue Account and surveyed public corporations. 

Comparing our data with official forecasts 

The independent OBR is responsible for the production of official forecasts for the UK government. These forecasts are usually produced twice a year, in spring and autumn. The latest forecast was published in the OBR's Economic and fiscal outlook - October 2024 report. The next OBR forecast will be published on 26 March 2025.