Revised figures released today put the 2026 surplus at £79m., after investment returns, whereas a deficit of £25m. was originally estimated when the States debated this year’s budget.
The surplus before investment returns is expected to hit £43m., which compares to a deficit of £48m. estimated a year ago.
‘Excluding non-recurring and presentational changes, the 2026 income tax forecast is £40m. favourable to budget, which reflects an upward revision to forecast bank income following receipt of additional information from 2024 company tax returns and the upward revision of expected Pillar Two income receipts,’ said P&R in its 2027 Budget report.
‘Document duty receipts are forecast to be £5m. favourable to budget, reflecting increased property transaction volumes and the effect of an exceptionally high property value sale in mid-2026.’
The senior committee expected other taxes and duties to be broadly in line with the budget it put forward 12 months ago, and expenditure by States committees has been estimated at £678.6m., a variance of just £600,000 – or less than 0.1% – on the initial budget.
P&R was confident that a general revenue savings target of £2.5m. in 2026 would be met by the end of the year, primarily through a drive to reduce spending on consultants which has been led by chief executive Boley Smillie.
It said that ‘a downward trend may be emerging’, with expenditure on consultancy fees expected to drop to £10m. this year, compared to £12m. last year and £15.5m. the year before.
The States’ overall financial position in 2027 will depend on which of two committee expenditure options the Assembly approves when it debates the Budget next month.
A net surplus, before investment returns, of £4.2m. has been estimated, if deputies vote to hold down committees’ spending next year in line with an ‘inflation minus 1%’ policy which they agreed in January.
That surplus would grow to about £27m. if tax revenue came in slightly above the central assumption. Under this scenario, once investment returns are also taken into account, the surplus could climb above £50m.
However, should the Assembly approve alternative proposals allowing higher committee expenditure, and if tax revenues were slightly below expectations, States finances in 2027 could be expected to plunge into a deficit of about £30m.
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