But Policy & Resources warned that the good news was a one-off and did not change the underlying problems facing public finances.
The improvement last year was driven by an unexpected boom in income tax receipts, especially from banks, and document duty from a surge in local and open market house purchases.
Committees spent £4m. more than budgeted, mostly on the healthcare and internal services overseen by P&R, but that was dwarfed by £56m. more income than estimated at the start of the year.
In total, the operating surplus was £41m. against a budgeted deficit of £21m., and the net surplus including investment returns and depreciation was £36m. compared to an estimated deficit of £34m.
‘The welcome additional revenue in 2025 more than compensates for the poor performance in 2024,’ said P&R’s treasury lead Gavin St Pier at today’s States meeting.
‘It is a useful contribution to our depleting reserves but does not, without wider reform, change their trajectory.’
P&R will lead a debate later this week on whether to include food if the States goes ahead with a goods and services tax from 2028.
The senior committee is currently reviewing alternatives to GST before recommending a long-term tax and spending package to deal with an annual ‘black hole’ which treasury officials still expect to reach nearly £100m. in a few years’ time.
The 2025 accounts are yet to be audited, but Deputy St Pier told the States that the provisional figures showed that income tax paid by banks was £37m. more than budgeted. That included £11m. from one bank which had calculated an underpayment of tax in the preceding seven years and £12m. on profits which dated back to 2023.
‘Therefore, £23m. of the £37m. in additional revenue is exceptional and it cannot be built into our baseline and relied on in future years,’ he said.
‘It’s a windfall, significant for this year, but unlikely to be repeated next year or in future years, and not significantly material to the long-term financial position of the States.
‘Fortunate though this is in 2025, it does highlight the inherent volatility in the tax from corporate profits generally and banking profits in particular, which are drawn from a very small number of banking taxpayers, given there are only 21 licensed banks.
‘That is not a basis on which to build sustainable and reliable public finances.’
The banking boom was also thought to be responsible for larger staff bonuses in the final quarter of the year, which resulted in ETI receipts from individual taxpayers coming in £7m. ahead of budget.
A 27% increase in local market transactions, combined with a smaller increase in activity in the open market, pushed document duty receipts to nearly £27m. in 2025, almost £11m. ahead of budget.
HSC spent £3.3m. more than its 2025 authorised budget and P&R’s corporate services division ended the year with a £2.7m. overspend. But Employment & Social Security underspent its budget by £1.2m. after paying out less income support than budgeted.
Pay costs for the year totalled £351m., which was in line with the budget.
‘However, this hides the fact that there were over 300 vacancies on average over the year, which equates to 6% of the workforce. Many of these vacancies have had to be covered through overtime or agency staff which cost more than full time employees,’ said Deputy St Pier.
The final numbers for 2025 will be published on 2 June after they have been audited.