Despite pleas from the industry, the govrnment ignored calls to reduce, or abolish the IPT tax in this year’s Budget. A tax on the law abiding to pay for the damage caused by the lawless on UK roads is deeply unfair and can only lead to more people choosing to drive uninsured, as IPT adds another layer on top of rising premiums.
For the various UK government(s), IPT provides more cash for all manner of vanity projects, Net Zero nonsense and – most important of all – public sector index-linked salaries and pensions. So it’s no surprise that the latest HMRC tax receipts data shows Insurance Premium Tax (IPT) collected a total of £1.5 billion in February. This takes the total collected through the first 11 months of the Financial Year to £8.1 billion and sets a record annual total with one month of receipts still to come. It marks the third successive year in a row that IPT has hauled in all-time high receipts, surpassing last year’s total of £7.3 billion.
Additionally, the OBR expects revenue from IPT to rise even higher than expected over the coming years compared to just four months ago, increasing its forecasted revenues by over £370 million between 2023-24 and 2028-29.
Cara Spinks, Head of Insurance Consulting at leading actuarial consultancy OAC, commented: “With tax receipts still to be collected for one month of the Financial Year, IPT has nonetheless already exceeded all previous annual records.
“The bumper tax haul demonstrates both the importance of the tax to the Exchequer as well as the impact that rising insurance premiums are having on household budgets. Many will have felt the financial squeeze when renewing policies, which is adding to the increase in IPT receipts.
“It is disappointing therefore that, amid lengthening waiting times for NHS treatment, the Chancellor did not take the opportunity in the Spring Budget to reduce the level of IPT for private medical insurance. Demand for PMI is increasing, evidenced by an all-time high level of private health admissions reported just last week by PHIN.
“A reduction for health insurance products such as PMI and health cash plans would have helped more employees get the healthcare they need to be productive at work, reduce absenteeism and increase productivity, all the while reducing the pressures on public health services.”
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