The government collected record receipts from insurance premium tax and inheritance tax in the last year, according to the latest HMRC update.
Its figures show the IPT tax receipts stood at £8.88bn for the previous financial year, a 9 per cent year-on-year increase — and a 200 per cent increase when compared to revenues collected 10 years ago.
There was a similar boost to IHT receipts, with HMRC collecting £8.2bn over the previous tax year, a 10 per cent increase. This is the fourth consecutive year the government has collected a record sum from IHT.
The HMRC figures also show the government continued to benefit from fiscal drag, due to the continued freeze on income tax thresholds. Income tax rceipts ballooned to £301.4bn in the past year. Since income tax thresholds were frozen in April 2022, these tax receipts have risen by 21 per cent — and are up by 85 per cent over the past decade.
Employee benefit consultants said that rising IPT receipts have been driven by the increased cost of many policies alongside growing demand for health insurance products, such as private medical insurance and cash plans, partially driven by long waiting lists on the NHS.
Broadstone’s head of life and health Cara Spinks says: “The full-year IPT receipts to March 2025 indicate another significant increase for the chancellor, surpassing previous records and providing the Treasury with a substantial multi-billion-pound boost.
“We have noticed an increasing number of employers seeking support from the independent healthcare sector for their workforce. This shift is largely due to the rise in economic inactivity caused by chronic illness combined with ongoing challenges within the NHS which have limited its ability to support general population health and productivity.”
She adds: “As the Government continues to explore ways to enhance the nation’s health and wellbeing, removing or reducing IPT from health insurance products could be a strategic move. While this would need to be balanced against a potential reduction in tax revenue, it could support the Government’s goals of boosting productivity, complement the valuable work of the NHS, and increase workforce participation.”
Meanwhile retirement specialist Just Group’s director Stephen Lowe points out that frozen thresholds and rising property prices have helped deliver four years of record IHT receipts. He says: “This winning streak for the Treasury looks likely to continue for some time to come, with the changes announced at the Autumn Budget set to bring in even greater amounts over the rest of this decade and beyond.”
This includes proposals to bring pensions into the IHT net.
Hargreaves Lansdown head of personal finance Sarah Coles adds: “Fiscal drag continues to exert horrible pressure on our finances. In the 2024/25 financial year, we handed over an eye-watering £301.4bn in income tax alone.
“The fact that this freeze is in place until 2028 means this pain is far from over, so it’s going to be vital not to pay more than our fair share of this tax.” This will support the continued use of pensions and Isas she says, particularly for higher earners.
