Insurance premium tax (IPT) receipts have reached £4.53 billion in the first half of the 2026/27 financial year, just £11 million below the record six-month total set a year earlier. The figures land one week before a first Budget from a new Chancellor and a new government, with the IPT rate on health cover unresolved.
HMRC published the data in its monthly tax receipts bulletin, covering April to September. September receipts held flat at £40 million, matching the same month last year. The full 2025/26 financial year produced £9.04 billion in IPT, up from £8.88 billion in 2024/25 and nearly double the £4.86 billion collected in 2016/17, the financial year in which the standard rate completed its rise to the current 12%.
The growth since 2016/17 reflects two distinct forces: the three rate increases that took IPT from 6% to its current 12% between November 2015 and June 2017, and a sustained rise in demand for health-related insurance products that has pushed receipts higher even with the rate frozen. The Office for Budget Responsibility now expects IPT to raise £57.8 billion between 2025/26 and 2030/31, a £500 million upward revision on its Autumn Budget forecast, with health insurance demand cited as a key driver.
Group health schemes carry a 12% IPT charge that cannot be reclaimed, unlike VAT. That means employers bear the full cost on top of premiums that are already rising. Medical inflation has run at elevated levels, and private medical insurance (PMI) utilisation has climbed as NHS waiting lists have remained stubbornly high.
Private medical insurance now covers approximately 7.6 million people in the UK, up from 6.7 million in 2020, according to Broadstone analysis of the Financial Conduct Authority’s (FCA) Financial Lives survey, with NHS pressure cited as the primary driver of uptake. That growth in the insured population feeds into IPT receipts, creating a cycle in which the tax grows because the NHS is failing to absorb demand.
Cara Spinks, head of life and health at financial services consultancy Broadstone, said the near-record figure underscored a structural tension in government policy. “Pressure on NHS services means more employers and individuals are turning to private medical insurance and other health insurance products to access diagnosis and treatment more quickly,” she said. “At the same time, rising medical costs are feeding through into higher premiums and, in turn, higher IPT receipts.”
The British Insurance Brokers’ Association’s (BIBA) 2026 manifesto lists maintaining the current IPT rate for the length of this Parliament among its 10 headline asks of government. The ABI, the Confederation of British Industry (CBI), and named insurers, including AXA Health and Bupa, have made similar arguments in previous years, with no change in the rate so far.
The sharper argument being made by Broadstone and others is not simply about cost. It is about consistency. The Keep Britain Working Review, led by Sir Charlie Mayfield and published in November 2025, placed employers at the centre of tackling health-related economic inactivity, costing UK employers an estimated £85 billion a year in lost output. A Vanguard phase is now under way, with employers testing employer-led approaches to workforce health. IPT on health insurance sits in direct tension with that agenda, adding cost to the very products the review is implicitly encouraging employers to buy.
“There is a real question over whether taxing these products is consistent with the government’s wider aims,” Spinks said. “Removing or reducing IPT on health insurance, alongside targeted incentives for workplace health programmes and support for smaller employers, could help widen access to earlier intervention, treatment and rehabilitation.”
Chancellor John Healey delivers his first Autumn Budget on October 28. No decision on the IPT rate has been announced, and the record-pace receipts make a cut harder to justify on fiscal grounds. IPT falls outside the government’s manifesto commitments not to raise income tax, National Insurance, or VAT, leaving it among the few revenue lines open to adjustment in either direction.
