HM Revenue & Customs figures show that insurance premium tax generated £7.70 billion in the first 10 months of the 2025/26 financial year, with January's £872 million haul a record for the month.
With this trend, IPT receipts track towards another all-time high amid rising demand for private medical insurance (PMI).
The year-to-date total represents a £134 million increase compared with the same period in 2024/25, when receipts stood at £7.56 billion. That earlier period contributed to a record full-year total of £8.88 billion.
The trajectory reflects sustained long-term growth. Insurance premium tax revenues have risen 40% over five years from £6.31 billion in 2020/21 and 170% over the past decade from £3.29 billion in 2014/15, driven largely by rising premium volumes and expanding demand for health-related products.
Forecasts from the Office for Budget Responsibility, issued as part of the Autumn Budget, suggest IPT receipts are on course to reach £8.97 billion in 2025/26. The OBR projects the figure will rise further to £10.1 billion by 2030/31.
First introduced in 1994 at 2.5%, IPT was designed to tax a sector exempt from VAT. The standard rate doubled from 6% to 12% between October 2015 and June 2017 through three successive increases.
A higher rate of 20% applies to travel and electrical appliance insurance. Unlike VAT, the tax cannot be reclaimed by businesses or individuals.
The Association of British Insurers (ABI) has long campaigned for reform, describing IPT as a "raid on the responsible." ABI research in 2024 found that 67% of people had little or no knowledge of the tax, despite it affecting 84% of UK households.
In a 2022 submission, the ABI warned that 900,000 households would likely cut back on home contents insurance if premiums rose by 10% or more.
The British Insurance Brokers' Association (BIBA) has also pushed for change. Research from WPI Economics, commissioned by BIBA for its 2025 Manifesto, found that 40% of businesses would pass on costs to customers if insurance premium tax were increased, while 30% said it would reduce investment. BIBA described IPT as a "tax on growth."
Cara Spinks, head of life and health at Broadstone, said the latest data pointed to another record year. She noted that claims across workplace health insurance continue to rise, with more employers turning to products such as private medical insurance and health cash plans as chronic sickness weighs on the workforce.
Spinks cited CIPD data showing employees were off sick for an average of 9.4 days in the past year, up from a pre-pandemic average of 5.8 days.
She added that ongoing NHS pressures are shaping employer behaviour, with private medical insurance now covering approximately 7.6 million people in the UK.
On tax policy, Spinks said IPT reduces the affordability of health insurance and called on the government to consider introducing an exemption. Such a move, she added, would support the ambitions of the Keep Britain Working review and help ease workforce pressures constraining UK productivity.
