The UK has started financial year April 2024 to March 2025 with a new record for Insurance Premium Tax (IPT) collections for April – at £615 million, a 12% rise from April 2023’s total IPT receipts worth £548 million.
Commenting on the numbers, OAC insurance consulting head Cara Spinks (pictured) said: “Despite a general cooling in premium inflation, demand for health insurance remains high as current NHS (National Health Service) pressures and waiting lists mean private healthcare is an increasingly attractive option for individuals, and for employers wanting to maintain a healthy and active workforce.
“Employers are increasingly stepping in to fill the healthcare gap, offering their employees a range of tailored health insurance products such as PMI (private medical insurance) and health cash plans in order to protect the health and wellbeing of their staff.”
However, she pointed to rising claim costs and the upward pressure on health insurance premiums. With the Office for Budget Responsibility predicting IPT receipts will climb to £8.8 billion by 2028/29, Spinks stressed the need for government intervention.
“We would strongly urge the government to consider the importance of employers and individuals being able to access affordable and flexible health insurance products and the wider benefit it can have on the economy and the NHS.
“Alleviating or removing IPT on health insurance products would be a sensible, strategic move to help employers and employees be productive and successful, reducing sickness-related absenteeism and relaxing the burden on the NHS.”
Amid the country’s current economic environment, features of which include sluggish growth, Prime Minister Rishi Sunak has called a general election for July 4, with his Conservative party expected to focus on tax cuts despite concerns about the impact on public services. Labour’s pledges, meanwhile, span housebuilding, NHS improvements, a green deal, and renationalising transport services.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented: “Although some of the more severe headwinds have eased, the Conservatives will go into this election facing an electorate still struggling with the cost of living. Inflation has come down towards target, but it has disappointingly missed forecasts, which means prospects for an interest rate cut have been pushed further into the distance.”
She also noted: “The Chancellor has pledged to cut personal taxes further, with more tinkering to National Insurance looking likely, to try and stimulate growth. The latest public sector borrowing snapshot arguably offers the government even less wiggle room to bestow treats on voters. Borrowing in April totalled £20.5 billion, above the forecast of the Office for Budget Responsibility, and overall borrowing for the year was revised upwards.
“It seems further tax cuts would come at the expense of public services. Already current government spending plans would involve a large cut to departmental budgets over the rest of the decade, according to the IFS (Institute for Fiscal Studies), to meet the government’s own fiscal rules.
“With the NHS grappling with impossible waiting lists, the numbers of long-term sick have been climbing. This reduces the pools of available labour to help kickstart productivity and potentially keeps wages higher, weighing on company costs, all of which is set to constrain economic growth.”
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