British finance minister George Osborne met his target for lowering the country's budget deficit in the 2014/15 financial year, avoiding an embarrassment two weeks before a national election.
The Office for National Statistics also said today that retail sales in March unexpectedly fell, hit by the biggest slump in fuel sales in just under three years.
This will add to concerns about a slowdown in economic growth in early 2015.
On the public finances, public sector net borrowing, which excludes state-controlled banks, totalled £7.4 billion in March, down 5.6% from a year earlier and the lowest for that month since 2004.
Economists in a Reuters poll had forecast a shortfall of £7.1 billion.
The shortfall for the financial year, which runs to March 31, fell to £87.3 billion, comfortably below the latest projection of £90.2 billion set out by Britain's independent budget forecasters.
But Britain's budget deficit remains large by international standards at 4.8% of gross domestic product.
Osborne had originally planned to all but wipe out the deficit by 2015 when his Conservative Party and the Liberal Democrats formed a coalition government after the last election in 2010 when the deficit was more than 10% of GDP.
He has blamed the miss on the crisis in the euro zone in recent years which hit Britain's economy.
March's public finances were boosted by an increase in income tax revenues and national insurance contributions which rose nearly 4%.
In the 2014/15 financial year as a whole, income tax was its highest on record, the ONS said.
Economists have worried that a previously slow recovery in income tax suggested that strong economic growth might no longer mean strong revenues for the government as many workers remained on low pay.
Osborne says that if the Conservatives win the May 7 election, he will aim to deliver a small overall budget surplus by 2018/19 although the International Monetary Fund last week forecast that the deficit would run until the end of the decade.
The opposition Labour Party promises it will eliminate the deficit on the current budget - which excludes investment - as soon as possible if it wins the elections in May. It accuses Osborne of an "ideological" pursuit of greater austerity.
The ONS also said today that retail sales fell 0.5% in March compared with February and were up 4.2% compared with March last year. Economists in the Reuters poll had forecast increases of 0.4% and 5.4%.
The ONS said a 6.2% fall in fuel sales drove the decline. It was the biggest fall in fuel sales since April 2012, when shortages caused disruptions.
Leaving out the months when there were one-off hits to fuel sales, the fall in March was the largest since November 2009, the ONS said.
Excluding fuel sales, retail sales were up 0.2%on the month and were 5% higher on the year, weaker than forecast by economists.
