Insurance Premium Tax (IPT) receipts reached £1.48 billion in May 2025, according to new HMRC data, reflecting an increase of £50 million compared to the same month in 2024.
Over the first two months of the 2025/26 financial year, total IPT receipts amounted to £2.13 billion, up from £2.05 billion during the equivalent period last year.
The update follows a record £8.88 billion collected in IPT revenue during the 2024/25 financial year. Forecasts from the Office for Budget Responsibility (OBR), published alongside the Spring Statement, project that IPT will generate £9.2 billion over the current financial year, with the figure expected to rise to £9.9 billion by the end of the decade.
Earlier this year, HMRC also recorded IPT revenues of £648 million in April, the highest ever recorded for that month and marking a 5% increase year-on-year. The combined receipts for April and May point to a continuation of the upward trend observed over the past year.
As of mid-January 2025, IPT receipts for the 2024/25 financial year had reached £7.6 billion, following monthly revenue of £853 million in January alone. These figures placed the Treasury on course to exceed the previous year’s record before the financial year had closed.
The growth in IPT receipts coincides with a rising number of UK adults purchasing private medical insurance (PMI) and other health-related cover. The latest Financial Lives Survey 2024 from the Financial Conduct Authority found that 14% of UK adults now have PMI, equivalent to 7.6 million people. This compares with 6.7 million in 2020.
There has also been increased demand for healthcare cash plans and dental plans. The number of policyholders for these products rose from 4.0 million in 2020 to 5.1 million in 2024, according to the same survey.
Despite the growth in collections, survey data collected earlier this year indicated that 81% of respondents believed insurance should not be subject to additional tax, with 82% regarding insurance as essential. Moreover, 68% of participants said they would expand their insurance coverage if premiums were more affordable.
Broadstone’s head of life and health, Cara Spinks (pictured above), said IPT receipts for May matched the elevated levels seen in April, indicating another strong year for Treasury revenue.
"Ongoing challenges in NHS accessibility and waiting times continue to drive interest in independent health insurance options, such as PMI and health cash plans. Many employers are expanding health coverage to support employee wellbeing and manage the impact of sickness-related absences,” Spinks said.
Spinks also noted that the growth in premiums is being driven by increased claims activity and higher treatment costs, including cases involving previously untreated conditions.
“However, rising premiums are making these health insurance products less accessible for some, despite their clear preventative and productivity-related benefits,” she said. “We encourage the government to consider reducing or removing the tax burden on these products to support broader access and promote a healthier, more resilient workforce.”
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