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In 2026/27, the government of the United Kingdom is expected to receive more than 1.3 trillion British pounds of public sector current receipts, with 359 billion British pounds coming from income tax, as well as 214 billion pounds from VAT. Other considerable sources of income include Corporation Tax, predicted to raise 104 billion pounds, and Council Tax, which will raise around 54 billion pounds. 

Government revenue falls short of spending

Overall government revenue in 2024/25 amounted to approximately 1.23 trillion pounds, but with the government spending around 1.36 trillion pounds, the UK borrowed almost 132 billion pounds to cover its costs. As a consequence, the UK's national debt increased from 2.8 trillion pounds in 2022/23, to 2.9 trillion pounds in 2024/25, almost 100 percent of GDP. Financing this debt is becoming increasingly burdensome for UK government finances, with the UK spending more on debt interest than on defence, transport, and public order and safety.

Impact of COVID-19 on revenue sources

Income received from some of the UK's typical revenue sources was severely depleted at the height of the COVID-19 pandemic. In 2018/19, for example, VAT raised around 132.5 billion pounds, with receipts falling to 129.9 billion pounds in 2019/20 and just 101.7 billion pounds in 2020/21. Corporation Tax fell from 61.6 billion pounds in 2019/20 to 50.5 billion pounds in 2020/21, while revenue from Air Passenger Duties declined from 3.64 billion pounds in 2019/20 to just 590 million pounds in 2020/21 and just over one billion pounds in 2021/22.