As the UK economy becomes a slow car crash the Chancellor is expected to try every trick to raise taxes, except the headline Income 7 NI ones. One target could be IPT, which punishes those who play by the rules and take out insurance on travelling abroad, cars, homes, private healthcare/dental costs etc. Here’s some comment from Broadstone;
Broadstone, a leading independent financial services and employee benefits consultancy, is warning against the possibility of any increases to Insurance Premium Tax (IPT) at the upcoming Autumn 2025 Budget.
The Government is reportedly exploring further revenue raising measures amid strained public finances and leading political figures have already called for increased taxation on private medical services.
In the year since Labour won the General Election, NHS waiting lists have seen gradual improvements, falling by over a quarter of a million people (253,912) from a record 7.62 million patients in July 2024 to 7.37 million patients in June 2025. However, the backlog remains at unprecedented levels after rapid increases in the wake of the global pandemic leading to significant growth in economic inactivity due to long-term illness.
Meanwhile, IPT receipts have soared in recent years, increasing by 9% to £8.9 billion in 2024/25.
IPT, currently set at 12%, is charged on most insurance policies, including PMI. A higher rate of IPT would increase costs for both employers and employees, potentially leading to lower take up of the benefit and so reduced coverage levels across the UK’ s workforce.
For company-funded health benefits, like PMI and health cash plans, an increase to IPT would have a ‘double whammy’ impact. It would increase the cost to the employer funding the premiums, and because employees are taxed on the value of the benefit it would also increase the P11d tax liability and therefore increase the cost to the employee.
Broadstone’s Head of Health & Protection, Brett Hill, said that increasing taxes on the private health sector, such as a rise in IPT could prove counter-productive for the UK economy given recent increases in economic inactivity due to long-term illnesses.
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