Incorrect data supplied by HM Revenue and Customs to the Office for National Statistics means government borrowing was overestimated by a combined £3bn in the last two fiscal years, it has emerged.
The error, which was published in last month's public sector finances bulletin, means public sector net borrowing was overestimated by between £200m and £500m in each month between January and August 2025 – and provides a boost to the chancellor, Rachel Reeves, ahead of next month’s Autumn Budget.
In a notice published on Wednesday, the ONS said correcting for the error reduces public sector net borrowing by between £200m and £500m per month between January and August 2025, and that this results in a reduction in borrowing of £1bn for the 2024-25 financial year, and £2bn for the current financial year.
This means that public sector net borrowing for the first five months of the 2025-26 financial year is £81.8bn rather than £83.8bn, and is £5.2bn ahead of the Office for Budget Responsibilty’s estimates for the current financial year, instead of the £5.5bn initially stated.
The ONS said it “apologises for any inconvenience caused”.
James Benford, director general for surveys and economic and social statistics at the ONS, told PA: “The error reflected an omission by HMRC of some payment streams from the data used to estimate VAT receipts.
“It is difficult for the ONS to set up a mechanism to independently check these external inputs.”
The ONS, in partnership with HM Treasury, provides monthly figures on public sector finances. The ONS said the next will be published on 21 October and will include corrections for the error, along with further regular data updates.
Admitting to the mistake in a statement on GOV.UK on Wednesday, HMRC said it identified the error in its "VAT cash receipts outturn which impacts provisional 2025-2026 year to date receipts".
The department said it has now revised this series in its latest publication released on GOV.UK, with VAT cash receipts from April 2025 to August 2025 now increased by £2.4bn because of the revision.
HMRC said there is "no impact on earlier years" and the issue "does not affect HMRC’s annual report and accounts, nor any interactions with taxpayers".