The Liberal Democrats are to announce plans to overhaul capital gains tax to raise £5bn for the NHS, making them the first party to announce a big tax change as part of their spending plans.

Jessica Elgot www.theguardian.com 

The party’s leader, Ed Davey, said the change was “making tax fairer” and the party said it would hit only the wealthiest. The party will unveil its manifesto on Monday.

The estimated £5bn raised by the tax rise would be directed into plans to recruit 8,000 more GPs in order to meet a target of a guaranteed appointment in seven days. The revenue raised would also be put into cancer treatment, speeding up waiting times for treatment to guarantee care within 62 days.

The party will say that those on lower incomes would be protected by an increase in the annual tax-free CGT allowance to £5,000, up from £3,000 in the current tax year. The proposed new system would be adjusted for inflation and there would be a targeted relief system devised for small businesses.

The policy puts health and social care at the centre of the Lib Dems’ offer at the election – where Davey has put his experience as a carer for his disabled son at the heart of his message to the public.

The Lib Dems have already announced a plan for free personal care including washing and medication for disabled and older people, funded by reversals of tax breaks for banks estimated at £2.7bn – though independent thinktanks have said the cost is likely to be higher.

Labour’s shadow chancellor, Rachel Reeves, has said her party will not make changes to CGT, though some in the party believe there is a case for an overhaul that would be a significant revenue raiser.

Several thinktanks have said that the two main parties are not being honest with the public about the state of the public finances, as Labour and the Tories have ruled out any big tax rises.

Last month the Institute for Fiscal Studies said there was a “conspiracy of silence” over necessary tax and spending choices, with the next government likely to inherit the toughest outlook for the public finances in 80 years.

The Lib Dem proposal would create three bands to be applied to taxable gains at different rates: gains between £5,000 and £50,000 taxed 20%; those between £50,000 and £100,000 taxed at 40% and those over £100,000 at 45%.

Davey said the NHS was in desperate need of a rescue package. “We are putting fixing health and social care at the heart of our party’s plans for the country,” he said. “Under this Conservative government, local health services have been decimated while hospitals crumble.

“After years of devastating tax hikes from Rishi Sunak, it would be grossly unfair to force hard-working families and pensioners to pick up the tab for Conservative failings on the NHS. That is why the Liberal Democrats will rescue health and social care services by making tax fairer, with billionaires and big banks asked to pay their fair share.”

Other big offers in the Lib Dem manifesto would be a pledge for an EU-wide scheme to allow under-35s to live and work in Europe, new paternity leave rights and a crackdown on sewage pollution.

The party is heavily targeting seats in the south-west and London commuter belt, the so-called “blue wall”, where it hopes to take votes from liberal voters disillusions with the Conservatives. Almost all the party’s target seats were held by the Conservatives, including some by senior cabinet ministers such as the chancellor, Jeremy Hunt, in Godalming and Ash, and the education secretary, Gillian Keegan, in Chichester.