The government continues to rake in record amounts from insurance premium tax (IPT) as latest HMRC figures show it collected a total of £2.1bn in the third quarter the current financial year.
Figure from Q3 (2023-24) are 14 per cent higher than the previous year, where £1.8bn was collected in IPT.
In total this means the Treasury has raised £6.1bn from this tax through the first three quarters of this financial year — a 12 per cent increase on the same period the year, when the government collected £5.5bn.
For the past two financial year the receipt collected in IPT has been a record amount, with expectations that this will be record tax haul for the third year running, potentially exceeding £8bn.
OAC head of insurance consulting Cara Spinks says: “While consumers are set to see another squeeze on their household finances, the Treasury looks set to haul in yet another bumper year of IPT receipts. Collections broke £6 billion in 2021/22, £7 billion in 2022/23 and could now surpass £8 billion through this financial year.”
This higher tax receipts were partly due to rising insurance premiums, she says with insurers hardening rates as inflation pushes up claims and other costs.
“Alongside rising costs, the health insurance sector has also experienced growing demand for its products. Increased pressure on the NHS has seen more employers and individuals take out private medical insurance and health cash plans to support continued health and speed up treatment.
“With the health of the nation and workforce at the heart of the government’s promise to drive up economic growth, the reduction or removal of IPT for health insurance products such as PMI and health cash plans could support this aim by reducing economic inactivity due to chronic illness while also easing the pressure on household finances.”
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