The government collected £130m more in insurance premium tax (IPT) receipts in the first 11 months of the financial year than it did during the same period 12 months ago.
The tax raised £8.95bn between April and the end of February, thanks to £1.26bn being collected in the final month.
This is compared to the £8.82bn generated during the same period in 2024/25, ahead of what proved to be record year for IPT receipts at £8.88bn.
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Following the Spring Statement, the Office for Budgetary Responsibility (OBR) has upgraded its forecasts for the tax.
As already reported by Health & Protection, it now expects £57.8bn will be collected between 2025/26 and 2030/31, £500m more than in its previous projection set following the Budget in November.
Cara Spinks, head of life and health at financial consultancy Broadstone, believes that it looks set to be another record-breaking year for IPT receipts.
She pointed towards workplace healthcare benefits as driving this growth given the high number of people waiting for NHS treatment.
“Employers are increasingly relying on products such as private medical insurance and health cash plans to support staff, as long-term sickness and chronic health conditions continue to impact the workforce,” she added.
“These products can support productivity and retention by enabling earlier intervention, diagnosis and preventative care, while also helping to ease pressure on NHS services.
“The scale of the challenge is significant: recent data shows average sickness absence remains well above pre-pandemic levels, with more people seeking faster access to treatment through private cover.”
Medical inflation
However, higher claims and medical inflation are having a negative impact on the market.
“Rising premiums and IPT are undermining affordability and limiting access at a time when these benefits are most needed.
“If the government is serious about reducing economic inactivity and supporting growth, it should review the role of IPT on health insurance, including the potential for targeted exemptions.
“This would remove barriers to wider uptake, support employers to keep people in work, and align with the ambitions of the Keep Britain Working review.”