Insurance Premium Tax (IPT) receipts reached a record £4.5 billion in the first half of the 2024/25 financial year, according to new data released by HMRC.
The figure marks a 13% increase compared to the same period last year, when £503 million less was collected.
A decade ago, IPT receipts for the six-month period (April to September 2014/15) totalled £1.5 billion, and five years ago (April to September 2019/20), they stood at £3.2 billion.
In September 2024 alone, £73 million in IPT was collected, slightly above the £71 million recorded in September 2023.
Cara Spinks (pictured above), head of life & health at consultancy firm Broadstone, noted the growing pressure for further increases to IPT as the Autumn Budget approaches.
“This morning’s IPT receipts, which saw a half-year record of £4.5 billion raised in the first six months of 2024/25, are being largely driven by a rise in insurance premiums due to high-cost inflation, alongside increased demand for health insurance,” she said.
Spinks also highlighted that more employers are turning to Private Medical Insurance (PMI) and health cash plans to support employee health amid NHS waiting lists exceeding 7.6 million. Many employers have seen healthcare costs rise by 15% to 25%, with some experiencing increases of over 50%.
Spinks raised concerns that while IPT generates significant revenue for the Treasury, further hikes could lead employers and individuals to reconsider offering PMI and health cash plans due to increasing costs.
“This could impact an already overstretched NHS, adding to the current backlog and exacerbating more complex health issues, particularly as one of the key benefits of PMI and health cash plans is to promote preventative healthcare, and support early screening and diagnosis,” Spinks said.
Spinks cautioned that while increasing IPT might seem an effective way to raise revenue, it could have long-term consequences for healthcare delivery.
“While it may appear a quick win for raising revenue, there are serious implications for the delivery of timely preventative services, which have the benefit of improving longer-term health and reducing the amount of economic inactivity caused by ill health,” she said. “Any such move could prove counter-productive, not only undermining the healthcare system but also impacting the government’s broader goals of sustainable economic growth.”
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