How the NHS is funded

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Part of The NHS in a nutshell

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  • Posted:Monday 01 March 2021

The NHS is funded mainly from general taxation supplemented by National Insurance contributions (NICs).

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From April 2003, National Insurance Contributions were increased to boost NHS funding. This increased the share of NHS funding that comes from National Insurance Contributions, but general taxation still accounts for the vast majority of NHS funding.

In addition, a small proportion of NHS funding comes from patient charges. These include charges for prescriptions and dental treatment first introduced in the early 1950s. 

Individual NHS organisations – such as hospital trusts – can generate additional income, for example, through parking charges, land sales and treating private patients.

The level of NHS funding in a given year is set by central government through the Spending Review process. This process estimates how much income the NHS will receive from sources such as user charges, National Insurance and general taxation. If National Insurance or patient charges raise less funding for the NHS than originally estimated, funds from general taxation are used to ensure the NHS receives the level of funding it was originally allocated.

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