The UK's borrowing estimate for the year to June has been cut by £2.7bn, which is the exact size of the overshoot reported a month ago

£2.7bn.

That is what the Office for National Statistics has taken off its estimate of public sector net borrowing in the financial year to June 2026, a cut of 4.6 percent that leaves the figure at £54.9bn. A month ago the same office published that year to date as £57.6bn and said it was running £2.7bn above the Office for Budget Responsibility forecast. The two figures are the same size. Take the revision off the estimate and the April to June period, on the published numbers, is no longer above the forecast at all.

July put most of it back

Borrowing was £1.8bn in July 2026. That was £0.7bn more than in July 2025, a rise of 68.7 percent on a small base, and £2.3bn above the OBR forecast for the month, and it was still the sixteenth lowest July in a record that is not adjusted for inflation. The financial year to July now stands at £56.7bn, which is £6.0bn and 9.6 percent below the same four months last year and £2.3bn above the forecast.

Both overshoot figures are £2.3bn. On the published numbers, the whole of the year to date gap arrived in a single month.

Central government did it. Its borrowing was £6.4bn in July against £5.2bn a year earlier, up £1.1bn or 22.0 percent, and that was despite self assessed income tax receipts of £17.1bn, £1.7bn more than in July 2025. The bulletin asks readers not to draw much from that figure on its own, because July payments can slip, and it recommends reading July and August self assessment together.

Where the revision came from

Of the £2.7bn taken off the year to June, £2.0bn was higher central government tax receipts, partly offset by a £0.4bn cut to the estimate of National Insurance contributions. Within the receipts increase, VAT alone was revised up £2.0bn. Central government spending was revised up by £0.3bn on a net basis that contains a £1.4bn rise in transfers to local government, and local government borrowing for the same period was cut by that same £1.4bn.

Most of it is the annual alignment exercise. In August the ONS incorporated HM Revenue and Customs figures published in the department's 2025 to 2026 annual report and accounts, and HMRC has begun aligning income tax, National Insurance contributions and VAT receipts to its accounting data every month rather than once a year, with the method applied back to April 2026. Corporation tax was already on that basis. The consequence the ONS states plainly is that published income tax, NICs and VAT receipts are no longer straightforwardly comparable with earlier periods, year to date comparisons included.

The VAT error

A notice at the head of the bulletin, dated the same day, records something separate and smaller. HMRC found a processing error in the VAT receipts data used in the June 2026 release. VAT receipts for March, April and May 2026 were each overestimated by around £235m, about 1.3 percent of total VAT receipts in each of those months, so borrowing and the current budget deficit for each month were each understated by a similar amount. No other months or headline statistics were affected, the ONS says, and the error is corrected in this release.

It runs the opposite way to the revision. The correction appears as a £0.7bn reduction in June 2026 cash receipts, partially offsetting the £2.0bn by which VAT was revised up. The notice also warns that HMRC publishes on a cash basis while the public finances are compiled on an accruals basis, so the same error lands in different months in the two publications even though the overall size is similar.

Debt

Public sector net debt was provisionally £2,984.9bn at the end of July 2026, £95.9bn more than a year earlier. As a share of the economy it was 94.1 percent, down 0.8 percentage points on the year and, the ONS notes, at a level last seen in the early 1960s. The wider net financial liabilities measure was £2,657.7bn, or 83.7 percent of GDP.

The end of June figure was revised up as well, by £4.9bn or 0.2 percent, to £2,994.8bn, which the ONS attributes largely to updated Bank of England data that arrives a month late. Set the two side by side and debt fell £9.9bn over July. It has still not been above £3trn.