THE shine was taken off the government's bumper month for tax receipts after it notched up a lower-than-expected surplus in July.
The Office for National Statistics said the surplus - which does not include public sector banks - hit £1 billion last month, down £200 million compared with July last year.
Economists were pencilling in a figure of £1.4bn.
The ONS said public sector net debt excluding banks climbed by £35.3bn to £1,604.2bn over the period, the equivalent to 82.9 per cent of gross domestic product (GDP).
Despite July's lower-than-expected surplus, Government borrowing in the current financial year to date made for brighter reading, as it fell £3bn to £23.7bn compared with April to July last year.
David Gauke, chief secretary to the Treasury, said: "With the public finances in surplus in July, our economy starts from a position of strength to face any economic turbulence following the vote to leave the EU.
"As we keep working to cut the deficit, we are well placed to handle any challenges and seize the opportunities as our economy adjusts. We are determined to build on our economic strengths to ensure Britain is a country that works for everyone."
The Treasury's coffers were boosted by a 3.4 per cent rise in tax receipts to £61.8 billion in July, compared with the same month last year.
It was driven in part by a 6.9 per cent rise in national insurance contributions to £9.7bn and a 8.4 per cent rise in Corporation tax to £7.5bn.
VAT receipts also picked up 1.3 per cent over the period to £11bn, while income tax lifted 1.9 per cent to £18.9bn.
The ONS said taxes on interest and dividend payments surged by 79.9 per cent to £1.8bn.
However, the jump in tax receipts was offset by a 1.4 per cent rise in government expenditure to £58.4bn over the period.
Chancellor Philip Hammond has indicated that the government may take advantage of the cheap cost of borrowing to push fresh investment into the UK in the hope of bolstering productivity.
Prime Minister Theresa May has also scrapped the government's previous target of achieving a budget surplus by 2020.
Samuel Tombs, chief UK economist of Pantheon Macroeconomics, said July's "relatively small surplus" means Mr Hammond will only be able to muster a small package of measures to boost the economy in the autumn statement.
"The public finances nearly always swing into surplus in July, as large firms make corporation tax payments on their expected profits for the year" he said.
"Corporation tax receipts actually performed well, rising 8.4 per cent year-over-year in July, much better than the OBR's (Office for Budget Responsibility) expectation for a 0.5 per cent full-year decline.
"But this surge was fully offset by weakness in other receipts; taxes on production, for instance, fell 0.8 per cent year-over-year."
