While advisers want tax breaks for private medical insurance (PMI), they think there is zero chance of it happening in today’s Spring Budget.
Ahead of the chancellor’s address to Parliament this afternoon, Health & Protection spoke to advisers about the chances of Jeremy Hunt delivering such cuts.
While the Association of British Insurers campaigned ahead of both last year’s Spring and Autumn Budget Statements for such cuts, Alan Lakey, director at Highclere Financial Services, told Health & Protection on a scale of a nought to 10, it’s a nought from him.
“IPT on PMI is penalising those who are assisting the NHS in bringing down diagnosis/operation queues,” Lakey continued.
“Logically, any forward-thinking chancellor would incentivise consumers to take our private healthcare and income protection to assist the NHS in meeting reasonable targets
“Since Covid, the NHS has sustained a sizeable backlog which seems to be ever increasing.
“Rather than throwing money at the system, they should be looking to persuade consumers to be pro-active. This would surely pay dividends be reducing the benefit payment.”
Joanna Streames, managing director at Velvet Mortgage Insure and Services, told Health & Protection it seems unlikely with the impending general election that the chancellor will take any steps to reduce insurance premium tax.
“This is, after all, a mainly unheard of taxation to the main part of the general public and the government are in dire need of revenue while also in need of making popular cuts. They are of course, in dire need of votes,” Streames said.
“The expected NI cuts will make much bigger headlines, whereas IPT cuts would be unlikely to cause much of a stir with most people not realising how it even affects them.
“That being said, there has been a lot of headlines around car insurance increases being so high, so there is a possibility I guess.
“Many common areas of general living have improved from where they were at times, last year, such as fuel, utility bills and mortgage rates. So it may be easy for the government to leave IPT as it is and largely it would go unnoticed.
“You don’t hear Joe Bloggs down the pub after a budget announcement kicking off about their insurance tax very often after all.
“Health cover has surged in sales in recent times due to the issues facing the NHS and public in turn with long waiting times and strikes still ongoing.
“When there are problems with the NHS, consumers will inevitably look to the private sector as an alternative.
“Businesses are realising the value of their workforce as an asset and employee benefits and attention to wellness are, therefore, on the up.
“To cut IPT would make this more feasible and easier to maintain for businesses to support their employees.”
Streames added she wondered if insurers were ready for the surge in sales.
“I don’t think they were,” she continued.
“They, too, face many challenges; fighting against inflation, having to recruit more medical professionals and customer service support all while trying to keep contracts comprehensive and competitive.
“To cut IPT would undoubtedly help insurers through this boom era to provide comprehensive access and customer experience keeping the product accessible, which can only help pick up the slack for the NHS.
“So even though I think it’s needed to safely grow this expanding market and in turn boost the economy, my feeling is a four or five on a scale of 1-10 that we will see any real cuts to IPT this budget.
“Fingers crossed I’m wrong.”
Steve Ellis, associate director of Prosperis, said: “On a scale of 1-10, have you got a negative number? It’s right at the bottom of priorities and it seems divisive.
“There is always a greater imperative for these cuts because companies are looking at it and asking where are my premiums going? It’s going up and up.
“However, politically it ain’t gonna happen this year, is my view.
“It might happen in subsequent years, but only if Jeremy Hunt and his crew get re-elected.”