UK government borrowing hits second-highest level in 32 years
Borrowing – the difference between total public sector spending and income – was £17.7 billion in May 2025. This was £0.7 billion more than in May 2024 and the second-highest May borrowing since monthly records began in 1993, after that of May 2020, data published by the Office for National Statistics on Friday (20 June) shows.
The only time higher borrowing was recorded was in May 2020, during the Covid-19 pandemic period.
Borrowing in the financial year to May 2025 was £37.7 billion. This was £1.6 billion more than in the same two-month period of 2024 and the third-highest April to May borrowing since monthly records began, after those of 2020 and 2021.
The current budget deficit – borrowing to fund day-to-day public sector activities – was £12.8 billion in May 2025. This was £1.7 billion less than in May 2024 and the fourth-highest May current budget deficit since monthly records began in 1997.
Tax gap
The reported increase in government borrowing comes a day after HMRC reported that the tax gap for the 2023 to 2024 tax year was 5.3%. The tax gap estimate is the difference between what tax is expected to be paid and what tax was actually paid over the period.
While £46.8 billion was unpaid in the 2023 to 2024 tax year, HMRC collected £829.2 billion, representing 94.7% of all tax due.
Every year, the HMRC estimates the tax gap using the most up-to-date information available, though figures may be revised as more data becomes available.
In line with standard practice, previous years’ tax gap estimates have been amended as part of today’s announcement, including the tax gap for the 2022 to 2023 tax year, which has been revised upwards from 4.8% (£39.8 billion) to 5.6% (£46.4 billion).
“Every pound of tax uncollected puts a greater burden on honest taxpayers and deprives our public services of vital funding,” said Exchequer Secretary to the Treasury James Murray
“In our first year in office, we have set out plans to raise an extra £7.5 billion through the most ambitious ever package to close the tax gap. We are determined to go further and faster to make sure everyone pays their fair share, and help to deliver our Government’s Plan for Change,” he said.
