Tax Receipts Bring Record July Surplus For UK Government

by Robert Lee, Tax-News.com, London

20 August 2007

The UK government has recorded a record fiscal surplus for the month of July, thanks to corporate tax payments, and rising revenues from income and value-added tax.

According to the Office of National Statistics (ONS), the government's net borrowing, which includes capital spending on items such as schools and hospitals, showed a surplus of GBP6.451 billion - a record surplus for the month of July - while the current budget, which includes all day-to-day spending such as salaries, showed a surplus of GBP8.6 billion, compared with GBP8.1 billion in July 2006.

The Treasury's coffers are traditionally boosted in the month of July by payments of corporate tax and self-assessment income tax ahead of the payment deadline at the end of the month. However, the ONS figures also noted a 7.9% rise in 'taxes on production' such as VAT, excise duties and stamp duty, and a 4% increase in income tax.

For the period between April and July 2007 however, the public sector was in deficit by GBP4.5 billion. This compares with a deficit of GBP3.1 billion in the same period last year.

Analysts have suggested that the figures leave the government on course to meet its GBP34 billion borrowing requirement for the year, although others have forewarned that a slowing global economy, prompted by a deteriorating housing market, could result in the government struggling to meet its fiscal targets in the future.

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