Insurance Premium Tax (IPT) raised a further £69m for the Treasury in June 2024, according to latest HM Revenue & Customs tax receipts data.
Following a record £8.1bn of IPT collections last year, the latest figure brings the total receipts for the first quarter of the 2024/25 tax year to a record £2.1bn – £235m or 12.5% higher than the same period in the previous year, and an all-time high figure for the opening quarter of the year.
The protection and health insurance sectors have long called for cuts to this tax and this was especially true as the country went to the polls at the start of the month.
And it is a call repeated by Brett Hill, head of Health & Protection (pictured) at Broadstone repeated in the wake of today’s figures.
Hill said: “NHS waiting lists remain at near-record highs and with 7.6 million stuck in the backlog for treatment, demand for private healthcare has risen to record levels.
“The majority of those accessing the private health market typically do so through insurance products like PMI or health cash plans. It is little surprise, therefore, that we are seeing IPT receipts rise in line with rising demand for private healthcare albeit premium inflation is also impacting most sectors of the insurance market.“
Hill highlighted that previous governments raised the rate of IPT four times in the wake of the financial crisis of 2008-09, meaning the rate of IPT has more than doubled from 5% in 2011 to its current rate of 12%,.
“In 2023/24, IPT raised a total of £8.1bn for the Treasury – a record annual sum for the third year in a row and a double-digit increase (11%) from the previous financial year,“ he continued.
“While this is mainly due to rising premiums across the insurance market, the increased take up of private medical insurance by UK businesses and households will also be driving this growth in tax receipts for the Treasury.
“The new Labour government has set out its ambition to drastically reduce NHS waiting lists and the private sector will inevitably play a key role in reducing the pressure on our public health services,“ he added.
“Costs are a significant challenge for this market so far from considering further tax rises on PMI, we hope to see the government recognise the economic and public health benefits of boosting access to the private health market and consider how reducing IPT on health insurance products could support its aims.
“A carve out would support business productivity and reward employers who are taking proactive action to support the wellbeing of their employees. It could also help reduce the 2.81 million people out of work due to long-term sickness thereby promoting a healthier society and a stronger economy.“