Insurance Premium Tax (IPT) receipts reached £5.52 billion in the first seven months of the 2025/26 financial year, up £68 million from the same period last year, HM Revenue & Customs (HMRC) data showed.
The 2024/25 financial year ended with an all-time high IPT take of £8.88 billion.
IPT is a tax levied on most general insurance premiums in the UK, including motor, home and commercial insurance, as well as certain health and travel policies.
Standard IPT is charged at 12% for most general insurance lines, while a higher rate of 20% applies to travel and some health-related insurance products. The tax generates a significant revenue stream for the UK Government but has been criticised by insurers and industry bodies for potentially discouraging uptake of certian insurance products.
Cara Spinks, head of life and health at consultancy Broadstone, highlighted that private medical insurance (PMI) and health cash plans have played a critical role since the pandemic in keeping the UK workforce healthy and reducing pressure on the NHS, which in turn supports economic growth. She noted that IPT effectively acts as a barrier to uptake for employers and employees, at a time when NHS waiting lists remain at record levels, and warned that the tax risks slowing progress on reducing backlogs and could undermine broader government growth ambitions.
Spinks emphasised that the Chancellor has the opportunity to address this in the upcoming Autumn Budget by removing IPT from health insurance, which would more than pay for itself through improved health outcomes and productivity, she suggested. She noted that the Government’s own ‘Keep Britain Working’ report underlined the importance of workplace health and reinforced the link between healthier workforces and improved outcomes for employers, individuals, and government alike.
The commentary comes as policymakers consider measures to boost private health cover uptake and relieve strain on public services. Industry voices like Spinks are calling for IPT reform as part of wider efforts to support workplace health and ensure financial accessibility of health insurance products.
With the Autumn Budget scheduled for Nov. 26, the insurance sector will be watching closely to see whether IPT adjustments are included to encourage uptake of private health cover and strengthen the connection between insurance, workforce wellbeing and economic performance.
