19th July 2026
Andy Burnham becoming Prime Minister on Monday is a done deal.
The UK tax system is much broader than the three headline taxes. There are indeed many different taxes, duties and charges, although the exact number depends on how they are counted. A government that rules out income tax, NICs and VAT still has a range of possible options—but each comes with political and economic trade-offs.
The starting problem: borrowing is not free
A government that wants to invest in housing, infrastructure, energy, transport and industry often argues that borrowing for productive investment can help economic growth.
The difficulty comes when financial markets demand higher interest rates on government borrowing.
When a government issues bonds (gilts), investors look at:
The size of government debt.
The credibility of spending plans.
Expected inflation.
Future tax revenues.
The ability of the economy to grow.
If investors believe borrowing may rise too quickly, they may demand higher returns. That increases the cost of servicing existing debt.
This creates a difficult cycle:
Higher borrowing costs → higher interest payments → less money available for public services and investment.
The UK already spends tens of billions of pounds each year servicing government debt, meaning interest payments compete directly with spending priorities.
What options remain if the big three taxes are frozen?
Let's not forget that income tax for most working people is rising due to freezing of allowances and many more pensioners are being dragged into paying tax for he first time and more people being dragged into paying higher rates due to fiscal drag. so with doing nothing to increase the actual rates on income tax the amount paid is rising.
Increase taxes on wealth and assets
One area often discussed is taxation of wealth rather than income.
Possible measures include:
Capital Gains Tax
Capital Gains Tax applies when people make profits from selling assets such as shares or second homes.
Governments could:
Increase rates.
Reduce allowances.
Align rates more closely with income tax.
The argument for reform is that investment gains are often taxed differently from wages.
The criticism is that higher taxes on investment may discourage entrepreneurship and investment.
Reform inheritance tax
Inheritance tax is politically sensitive but raises relatively little compared with income tax or VAT.
Possible changes could include:
Reducing exemptions.
Changing agricultural or business reliefs.
Lowering thresholds.
Supporters argue that large inherited wealth should contribute more.
Opponents argue that people may already have paid tax during their lifetime and that family businesses could be affected.
Increase taxes on property
Property is one of the largest stores of wealth in Britain.
Possible options:
Higher council tax bands.
A national property tax.
Reform of stamp duty.
A levy on high-value properties.
The challenge is political: homeowners tend to vote in large numbers, and property taxes can be unpopular.
Raise "sin taxes"
Governments have traditionally increased taxes on:
Tobacco.
Alcohol.
Gambling.
Sugary products.
These can raise revenue while being justified as improving public health.
However, they cannot replace the billions raised by income tax or VAT.
Introduce environmental taxes
A government focused on climate policy might consider:
Carbon taxes.
Aviation taxes.
Road pricing.
Higher fuel duties.
But there is a dilemma: as people switch to electric vehicles, fuel duty revenue will decline anyway.
A future government may need a replacement system for taxing road use.
Close tax loopholes and improve collection
This is a popular political promise.
The government could attempt to raise money through:
More HMRC enforcement.
Reducing avoidance schemes.
Tackling offshore tax arrangements.
Improving digital tax collection.
The difficulty is that estimates of "missing" tax revenue vary widely, and closing loopholes rarely raises as much money as campaign claims suggest.
Could growth solve the problem?
This is the central argument behind investment-led governments.
The theory is:
Borrow to invest → build infrastructure → increase productivity → grow the economy → collect more tax revenue.
For example:
More homes could increase construction activity.
Better transport could improve productivity.
Industrial investment could create higher-paying jobs.
Energy investment could reduce future costs.
If successful, economic growth can improve public finances without large tax rises.
However, markets will want evidence that investment will genuinely increase growth rather than simply increase debt.
What about spending cuts?
A government could also avoid tax rises by reducing spending.
Possible areas include:
Administrative savings.
Welfare reform.
Departmental efficiency.
Reducing some public sector costs.
However, after years of pressure on many public services, large cuts are politically difficult and may conflict with promises to improve housing, healthcare and infrastructure.
The biggest challenge: credibility
The lesson from previous financial market reactions is that governments can borrow for investment, but markets need confidence.
Investors usually ask:
Is the borrowing affordable?
Will the economy grow?
Are there realistic plans to control debt?
Are spending promises matched by funding?
A government can avoid raising income tax, NICs and VAT, but it cannot avoid economic reality.
Money must ultimately come from one of three places:
Higher taxes elsewhere.
Lower spending.
Faster economic growth.
The political challenge is deciding which combination is acceptable to voters.
The narrow path ahead
A future government wanting to rebuild Britain’s housing supply, infrastructure and industrial base while refusing increases in the three largest taxes would face a very difficult balancing act.
It could raise revenue through wealth, property, environmental and consumption taxes. It could pursue stronger economic growth through investment. It could seek efficiencies in public spending.
But there is no easy route.
The central question will not simply be "Will taxes rise?"
It will be:
"Who pays, when do they pay, and will the investment create enough growth to justify the borrowing?"
That is the challenge facing any government trying to combine ambitious investment plans with promises of tax restraint.