Insurance Premium Tax (IPT) receipts hit a half-year record of £4.5bn through the first six months of the 2024/25 financial year, according to the latest HM Revenue and Customs (HMRC) data.
That represents an increase of 13% over the same period last financial year, when just under £4bn was collected.
The increase in IPT receipts continues the trend from the first quarter of this year. Following a record £8.1bn of IPT collections last year, the total receipts for the first quarter were 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.
A decade ago, the total receipts collected in this six-month period was £1.5bn (April – September 2014/15), and five years prior the half-year total stood at £3.2bn (April – September 2019/20).
A total of £73m was collected through September 2024, compared to £71bn in the same month in the previous year.
Cara Spinks, head of life and health at independent consultancy Broadstone, said: “As we head towards the Autumn Budget, the temptation for further hikes to be made to IPT is clear.
“This morning’s IPT receipts, which saw a half-year record of £4.5bn 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.
“With more employers turning to private medical insurance (PMI) and health cash plans to support the health of their workforce in the face of NHS waiting lists exceeding 7.6m, many are seeing healthcare cost increases of between 15% and 25%, with some seeing spikes of over 50%.”
But Spinks warned of the dangers of increasing IPT rates.
She said: “While IPT provides a lucrative revenue stream for the Treasury, further increases may force some employers and individuals to reconsider offering PMI and health cash plans as a benefit due to unsustainable 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.
“The long-term implications of any IPT hike must be considered carefully.
“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.
“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.”