Cutting insurance premium tax (IPT) is the key to improving worker inactivity, according to Cara Spinks, head of insurance consulting at actuarial consultancy OAC.
Spinks’ comments follow latest HMRC tax receipts data for the full year 2023/24, which show IPT collected a total of £8.1bn – a record annual total for the third successive year.
Receipts were up by 11% on the £7.3bn generated in 2022/23 with the Office for Budgetary Responsibility (OBR) expecting that revenue from IPT will continue to grow, forecasting receipts of £8.8bn by 2028/29.
The release of the data also comes in the wake of renewed efforts from government to tackle workplace inactivity in measures announced by the Prime Minister late last week.
Health insurance demand up
Cara Spinks, head of insurance consulting at actuarial consultancy OAC, said: “The full year HMRC figures confirm yet another record-breaking year for IPT driven by rising insurance premiums.
“There is growing evidence that premium inflation is slowing but, amid record waiting lists and economic inactivity due to long-term illness, demand for health insurance continues to increase as employers look to protect the wellbeing of their workforce.
“Costs remain a challenge for this market, so we would like to see a commitment from the government to reducing or removing IPT on health insurance products such as PMI and health cash plans.
“It is well understood that the longer an individual is off sick, the harder it is for them to re-enter the workforce, and these products support early intervention by tackling the root cause and enabling people to remain in work.
“Reducing or removing IPT would be a step in the right direction, making these products more affordable and increasing accessibility.
“More employees would get access to the healthcare they need to be productive at work, reduce absenteeism and increase productivity, all the while reducing the pressures on public health services.”