Insurance premium tax (IPT) receipts totalled £3.07 billion in the first four months of the 2024/25 fiscal year, according to data from HMRC.
This figure represents an 11% increase compared to the same period last year, when receipts stood at £2.76 billion. In July 2024 alone, £957 million was collected, up from £884 million in the corresponding month of the previous year.
Cara Spinks (pictured above), head of life & health at Broadstone, an independent consultancy, noted that IPT continues to generate significant revenue for the Treasury, driven in part by premium inflation across various sectors.
Spinks highlighted that the private health industry has been particularly affected, with employers expanding coverage to address increased demand for healthcare driven by long NHS waiting lists and a rise in long-term sickness.
She also indicated that the Chancellor's search for alternative revenue streams to address the UK's fiscal challenges makes a reduction in IPT for health insurance products, such as Private Medical Insurance (PMI) and health cash plans, unlikely in the upcoming Autumn Budget.
However, Spinks suggested that the government should carefully consider this area, as providing affordable access to private healthcare, particularly for early intervention and preventative treatments, could help reduce the strain on the NHS.
Spinks also mentioned that by encouraging businesses to invest in more comprehensive health benefit schemes, the government could support the workforce's health and productivity, ultimately contributing to the nation's economic stability.
Earlier this month, national accountancy group UHY Hacker Young highlighted that the UK’s IPT has reached a new high of £8.4 billion, a 13% increase from the previous record of £7.5 billion recorded in the year ending June 30.
The rise in IPT has coincided with increasing insurance premiums, such as for car insurance, adding to the financial burden on consumers. IPT is calculated as a percentage of premiums, so the tax amount rises as premiums increase.
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