The government has collected a record amount from from insurance premium tax, with total receipts already surpassing those from last year, with one more month of the financial year to go.
Data published from HM Revenue & Customs shows that the Government collected £1.5bn from IHT in February, taking the total amount to £8.1bn from April 2023 to the end of February 2024.
This is significantly higher than the £7.3m collected for the April 2022/23 financial year — which itself set a new record. In total this is the third successive year in a row that IPT has hauled in all-time high receipts.
This increase is due to rising premiums across the insurance industry, and increasing numbers of people buying cover, particularly in healthcare markets.
Forecasts published by the Office of Budget Responsibility show that it expects revenue from IPT to rise even higher than expected over the coming years, compared to forecasts made just four months ago.
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.”
She adds: “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.”