The UK prime minister has indicated that extra funding to be provided to the health service will be partly raised by tax increases. No comment has been made on which taxes will rise except that this will be done in a fair and balanced way. Part of the funding is to be provided from economic growth and the contributions that would otherwise have been paid to the European Union, although there is some doubt as to how much extra funding could be raised from these channels.
The government stated at the time of the 2017 election that it intended to reduce tax for businesses and working families, so there will be some pressure to keep tax rises to a minimum. A rise in the rate of value added tax (VAT) was also ruled out at the last election although money could be raised by changing items subject to VAT exemptions, zero rating or the lower rate.
The government also made a commitment to reduce corporation tax. There has therefore been some speculation that much of the additional tax would come from increases in amounts raised from income tax and national insurance contributions. This could take the form of an increase in the tax rate but some extra money could also be raised by freezing income tax thresholds.
More detail on tax rises is expected to be provided in the autumn budget for 2018.
