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In 2026/27, the budgeted expenditure of the United Kingdom government is expected to reach over 1.4 trillion British pounds, with the highest spending function being the 400 billion pounds expected to be spent on social protection, which includes pensions and other welfare benefits. Government spending on health will amount to 294 billion pounds and was the second-highest spending function in this fiscal year, while education was the third-highest spending category at 145 billion pounds.

UK government debt approaching 100 percent of GDP

At the end of the 2024/25 financial year, the UK's government debt amounted to approximately 2.8 trillion British pounds, around 93.2 percent of GDP that year. This is due to the UK having to borrow money to cover its spending commitments, especially at the height of the COVID-19 pandemic, when this deficit amounted to almost 311 billion pounds. Without considerable cuts to spending or tax rises, the current government is aiming to reduce this debt by creating a stronger, more productive economy. Though this is how Britain's post-World War II debt was reduced, the country faces far more structural problems to growth than it did in the mid-20th century.

Income Tax the UK's main revenue source

Income Tax is expected to raise approximately 329 billion British pounds in the 2025/26 financial year and be the largest revenue source for the government that year.  Value Added Tax (VAT) receipts are expected to raise 214 billion pounds, with National Insurance contributions reaching 199 billion pounds. Although National Insurance rates for employees have actually fallen recently, the rate that employers pay was one of the main tax rises announced in the Autumn 2024 budget, rising from 13.8 percent to 15 percent. Though this avoided raising tax for workers directly, many UK businesses were critical of the move, with taxation seen as the main issue facing them at the start of 2025.