The latest figures show that the government had a surplus of £15.4 billion in January. This represents the difference between the tax it receives and what it spends.
Although this is the highest level of surplus for a January since records began over 30 years ago, it is lower than the £20.5 billion that was forecast. The Office for Budget Responsibility (OBR) have said that the shortfall was mainly due to tax receipts being lower than expected and debt interest becoming more expensive.
The chancellor has set two fiscal rules: (1) day to day government spending is to be funded by tax income and (2) debt needs to be falling as a share of national income by 2029/30.
Although the OBR said that the measures announced in the Autumn Budget would provide £9.9 billion of headroom, this wriggle room may have been eaten up over the last few months.
This means that speculation continues on whether Rachel Reeves will need to raise taxes or cut spending when she announces her Spring Forecast on 26 March 2025.
We will keep you posted on any developments that come from that announcement. If you would like advice or an estimate on how recent tax changes have affected you, please contact us and we would be happy to help you.
See: https://www.bbc.co.uk/news/articles/cly4z233zp4o
If you’re a parent of a 16 to 19-year-old who’s staying in full-time education or training, HM Revenue and Customs (HMRC) is reminding families to extend their Child Benefit claim by 31 August to avoid the payments stopping altogether.
With many families finding out where their child will be starting school this September, now is a good time for working parents to start planning childcare. The government’s Tax-Free Childcare scheme can save them up to £2,000 a year per child – and this could be good news for employers as well as employees.