Despite speculation, Chancellor Rachel Reeves did not increase insurance premium tax (IPT) in today’s Budget – but the Office for Budget Responsibility (OBR) still predicts that the tax haul from IPT will increase by more than £3bn over the next four years.
Today the OBR increased its estimated for IPT collected over the five years between 2024-25 and 2028-29 by £3.53bn, from a total of £42.40bn to £45.93bn.
Health & Protection reported earlier this month that for 2024-25 IPT receipts had hit a half-year record of £4.5bn.
That represented an increase of 13% over the same period last financial year, when just under £4bn was collected.
Brett Hill, head of health and protection at Broadstone, (pictured) said: “While it is positive that the IPT rate has not been raised as speculated, the chancellor can nonetheless look forward to higher than previously expected revenues from the levy over the next five years.
“Increasing numbers of employers funding healthcare benefits for employees due to concerns about NHS performance, followed by premium inflation as employees are forced to use these healthcare benefits to access the treatment they need, are undoubtedly contributing to this record uptick in IPT receipts.
“The worry is that IPT compounds the impact of rising premiums and impacts the affordability of healthcare benefits, especially when set alongside the rise in employers National Insurance costs, restricting the ability of employers to safeguard the health of their employees.
“With NHS pressures expected to remain high for the foreseeable future, employers need to carefully weigh up the cost of providing healthcare benefits, against the potential costs of failing to do so in terms of higher sickness absence rates and reduced productivity.”
Meanwhile, demand for private medical insurance continues, according to Dave Capper, CEO of Westfield Health.
Capper said: “In light of the UK’s ongoing health system strain, a new report found that nearly seven in 10 people have shown interest in going private due to long NHS wait times.
“The Budget missed a key opportunity to ease pressure on many individuals by supporting access to private health insurance.
“As seen in Ireland, eliminating Insurance Premium Tax (IPT) for health insurance can encourage more people to access private healthcare, reducing the NHS burden.
“Despite a new government, this same-old approach to healthcare lacks the innovation needed to address today’s complex health challenges.”
