Public sector finances UK July 2025

21st August 2025

Borrowing - the difference between total public sector spending and income - was £1.1 billion in July 2025; this was £2.3 billion less than in July 2024 and the lowest July borrowing for three years.

Self-assessed (SA) Income Tax receipts in July 2025 were £15.5 billion, £2.7 billion more than in July 2024; however, because of the possibility of delayed July payments, we recommend considering July and August SA Income Tax receipts as a whole when making year-on-year comparisons.

Borrowing in the financial year to July 2025 was £60.0 billion; this was £6.7 billion more than in the same four-month period of 2024 and the third-highest April to July borrowing since monthly records began, after those of 2020 and 2021.

The current budget - borrowing to fund day-to-day public sector activities - was in surplus by £3.3 billion in July 2025; this brings the total current budget deficit in the financial year to July 2025 to £42.8 billion, £5.4 billion more than in the same four-month period of 2024.

Public sector net debt excluding public sector banks was provisionally estimated at 96.1% of gross domestic product (GDP) at the end of July 2025; this was 0.5 percentage points more than at the end of July 2024 and remains at levels last seen in the early 1960s.

Public sector net financial liabilities excluding public sector banks were provisionally estimated at 83.9% of GDP at the end of July 2025; this was 2.3 percentage points more than at the end of July 2024, but 12.2 percentage points less than for public sector net debt.

Central government net cash requirement (excluding UK Asset Revolution Ltd and Network Rail) was £6.3 billion in July 2025; this was £22.8 billion less than in July 2024.

Borrowing in July 2025
Initial estimates show that the public sector spent more than it received in taxes and other income in July 2025, requiring it to borrow £1.1 billion.

This was £2.3 billion less than in July 2024 and £1.1 billion less than the £2.1 billion forecast in March 2025 by the Office for Budget Responsibility (OBR).

Public sector net borrowing is the sum of its current budget deficit and its net investment.

The current budget, which is usually in deficit, can be considered as borrowing to fund day-to-day public sector activities. This is the difference between its current receipts from taxes and other sources and its current expenditure on running public services, grants and administration.

The current budget was in surplus by £3.3 billion in July 2025; this was a £3.2 billion larger surplus than in July 2024.

Public sector net investment comprises acquisitions less disposals of capital assets (gross fixed capital formation), less the depreciation of capital assets, plus capital grants to the private sector, less capital grants from the private sector.

Net investment was estimated at £4.4 billion in July 2025, which was £0.9 billion more than in July 2024.

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

The relationship between central government's receipts and expenditure is an important determinant of public sector net borrowing. Of the £1.1 billion borrowed by the public sector in July 2025, central government borrowed £5.4 billion, with each of the other subsectors showing a surplus.

Central government current receipts
Central government's current receipts were £100.1 billion in July 2025, £8.8 billion more than in July 2024. Of this £8.8 billion increase in income:

central government tax receipts increased by £6.1 billion to £77.6 billion; this included increases of £4.5 billion in Income Tax, £0.9 billion in Value Added Tax (VAT) and £0.4 billion in Corporation Tax receipts

compulsory social contributions increased by £2.6 billion to £16.3 billion; on 6 April 2025 changes to the rate of National Insurance contributions paid by employers came into effect

Self-assessed Income Tax
Self-assessed (SA) Income Tax receipts were provisionally estimated as £15.5 billion in July 2025, £2.7 billion more than in July 2024. This was £0.6 billion more than the £14.9 billion forecast in March 2025 by the OBR.

As well as primarily affecting July receipts, the revenue raised through SA Income Tax also tends to lead to higher receipts in August, although to a lesser extent. This is because any delayed July payments will be recorded in August instead. We recommend considering July and August SA receipts together when making year-on-year comparisons.

Central government current expenditure
Central government spending data for July 2025 are provisional. There is uncertainty around these estimates until more detailed departmental information becomes available over time.

Central government's current expenditure was provisionally estimated as £92.1 billion in July 2025, £5.3 billion more than in July 2024. Of this £5.3 billion increase in spending:

central government departmental spending on goods and services increased by £2.9 billion to £38.7 billion, as pay rises and inflation increased running costs

net social benefits paid by central government increased by £1.6 billion to £27.6 billion, largely caused by inflation-linked increases in many benefits and earnings-linked increases to State Pension payments

central government debt interest payable increased by £0.2 billion to £7.1 billion, with movements in the Retail Prices Index (RPI) having little effect on index-linked gilt interest this month

payments to support the day-to-day running of local government decreased by £0.3 billion to £13.9 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 £9.6 billion in July 2025, £7.3 billion less than in July 2024.

In July 2025, central government made a £3.4 billion quarterly payment to the Bank of England (BoE) Asset Purchase Facility (APF) Fund. This was an £8.8 billion smaller payment than in July 2024. These payments are recorded as both central government net investment expenditure and BoE receipts, and so have no impact on overall public sector borrowing (PSNB ex).

Interest payable on central government debt
Movements in the RPI had little effect on the debt interest payable in July 2025. This follows a large rise affecting last month, largely because of the energy price-cap increase in April 2025. At £7.1 billion in July 2025, the interest payable on central government debt was £0.2 billion more than in July 2024.

Borrowing in the financial year to July 2025
The public sector spent more than it received in taxes and other income in the financial year (FY) to July 2025. Provisional estimates show it borrowed £60.0 billion over the four-month period, in line with the £59.9 billion forecast by the latest Office for Budget Responsibility (OBR) forecast in March 2025.

Borrowing in the FY to July 2025 was £6.7 billion more than in the FY to July 2024 and the third-highest FY to July borrowing since monthly records began in 1993, after those of July 2020 and 2021 during the coronavirus (COVID-19) pandemic period.

Of the £60.0 billion borrowed by the public sector in the FY to July 2025, the current budget deficit was £42.8 billion. This was £5.4 billion more than in the same four-month period a year ago. Public sector net investment increased by £1.4 billion to £17.1 billion over the same four-month period.

Public sector net debt
Public sector net debt excluding public sector banks (PSND ex) is a 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 July 2025 was provisionally estimated at 96.1%, 0.5 percentage points more than a year ago. However, this is a highly provisional estimate. It is likely to be revised in future publications because it partly relies on GDP estimates based on the Office for Budget Responsibility's Economic and fiscal outlook - March 2025 report.

Read he full ONs report with graphs HERE