---
title: UK Record Budget Surplus Driven by One-Off Tax Windfall
description: Record £30.4 billion UK surplus driven by anticipatory CGT disposals ahead of rate rises and an RPI-linked drop in debt interest payments.
author: Darie Nani (Editor-in-Chief)
date: 2026-02-20T20:17:13.000Z
updated: 2026-03-31T11:24:58.072Z
canonical: https://www.sovereignmagazine.com/article/uk-record-budget-surplus-driven-by-one-off-tax-windfall
image: https://cdn.nanimediahouse.com/1gvdqpvkwso.jpg
categories: Economy
content_type: News
region: United Kingdom
publication: Sovereign Magazine
---

The United Kingdom recorded a £30.4 billion budget surplus in January 2026, the largest monthly surplus since records began in 1993, according to the Office for National Statistics. The figure exceeded the Office for Budget Responsibility’s forecast by £6.3 billion.

## Capital gains tax receipts surged 69 per cent

The surplus was driven primarily by a spike in self-assessment tax receipts. Combined self-assessed income and capital gains tax receipts reached £46.4 billion in January, £10.5 billion more than the same month last year. Capital gains tax alone accounted for £17 billion (a 69 per cent year-on-year increase), while self-assessed income tax contributed £29.4 billion, up £3.6 billion.

The CGT surge reflects anticipatory behaviour. Chancellor Rachel Reeves [raised CGT rates](https://www.sovereignmagazine.com/article/rachel-reeves-plans-tax-increases-to-address-uk-budget-shortfall) in the October 2024 Budget from 10 per cent to 18 per cent at the lower rate and from 20 per cent to 24 per cent at the higher rate, with immediate effect. Investors and business owners who expected higher rates brought forward asset disposals to lock in lower bills. The annual exemption, already cut to £3,000 by April 2024, left little buffer against the increased charge.

This wave of disposals is unlikely to repeat. Higher CGT rates create a ‘lock-in’ effect where holders defer sales to avoid triggering larger [tax charges](https://www.sovereignmagazine.com/article/hmrc-tax-demand-shock-for-pensioner-highlights-fiscal-drag-woes), which typically reduces receipts in subsequent years.

## Debt interest fell to its lowest level since 2020

The second driver was a £5 billion drop in central government debt interest payments, which fell to £1.5 billion (the lowest since March 2020). Of that decline, £2.8 billion came from a mechanical reduction: the Retail Prices Index fell 0.4 per cent between October and November 2025, which reduced the capital uplift on index-linked gilts. This is a pricing adjustment, not a reduction in the government’s debt burden.

## Borrowing tracks below forecast but debt remains flat

Borrowing for the financial year to January stood at £112.1 billion, £14.6 billion (11.5 per cent) less than the same period last year and £8.3 billion below the OBR’s November forecast. Public sector net debt remains at 92.9 per cent of GDP, unchanged from 12 months ago.

The surplus gives Reeves a political tailwind ahead of the 3 March spring statement, where the OBR will publish updated economic and fiscal forecasts. At November’s Budget, she set fiscal headroom at £22 billion. The spring statement is an interim update rather than a full fiscal event, and the government has committed to only one major Budget per year.

The ONS cautions that self-assessment [tax receipts](https://www.sovereignmagazine.com/article/inheritance-tax-receipts-reach-7-1-billion-from-april-2022-to-march-2023-up-1-billion-year-on-year) split unpredictably between January and February depending on when taxpayers file. A definitive reading requires both months together. The structural picture has not changed: net debt is fixed at 92.9 per cent of GDP, and the OBR’s full-year borrowing forecast for 2025-26 remains around £138 billion. The January surplus was large and real, but both forces behind it (a one-off CGT windfall and an RPI-driven interest adjustment) do not repeat.

## Further Context

**Q: Will capital gains tax increase further in 2026 in the UK?**
The main CGT rate increase took effect immediately in October 2024, raising the lower rate from 10 per cent to 18 per cent and the higher rate from 20 per cent to 24 per cent. A further change arrives in April 2026, when Business Asset Disposal Relief and Investors’ Relief rates rise from 14 per cent to 18 per cent. The annual exempt amount remains frozen at £3,000, down from £12,300 in 2022-23. Combined with fiscal drag from frozen income tax thresholds, more taxpayers will face CGT charges on smaller gains than in previous years.

**Q: Did capital gains tax change in the November 2025 UK Budget?**
The November 2025 Budget did not introduce further CGT rate changes. The Chancellor focused on setting fiscal headroom at £22 billion and confirming spending plans for 2025-26. The OBR’s November forecast projected full-year CGT receipts based on the October 2024 rate increases already in effect. However, the Budget did reduce Employee Ownership Trust relief from 100 per cent to 50 per cent of the qualifying gain, effective immediately.