Insurance premium tax windfall sets record high for Treasury

A March 2025 insurance premium tax (IPT) receipt of £61m has taken the 2024/25 financial year IPT total to £8.88bn.

This is according to HM Revenue and Customs (HMRC) data, published on 23 April 2025, which revealed that this total sum for 2024/25 had beaten the previous year’s £8.15bn figure by £737m, or 9%.

HM Treasury has seen income from IPT nearly triple since the 2014/15 financial year, when this tax collected £2.97bn.

Furthermore, IPT income has grown 38% since 2019/20, when this figure stood at £6.42bn.

IPT is a two tier tax on general insurance premiums, which includes a 12% standard rate and a 20% higher rate that is applicable on travel insurance, mechanical or electrical appliances insurance and some vehicle insurance.

Boost for the chancellor

Cara Spinks, senior actuarial director at financial services consultancy Broadstone, said: “The full-year IPT receipts to March 2025 indicate another significant increase for the chancellor, surpassing previous records and providing the Treasury with a substantial multibillion pound boost.

“The increasing demand for health insurance products, such as private medical insurance and health cash plans, partially driven by longer NHS waiting lists, has contributed to this growth.

“We have noticed an increasing number of employers seeking support from the independent healthcare sector for their workforce. This shift is largely due to the rise in economic inactivity caused by chronic illness combined with ongoing challenges within the NHS, which have limited its ability to support general population health and productivity.

“As the government continues to explore ways to enhance the nation’s health and wellbeing, removing or reducing IPT from health insurance products could be a strategic move.

”While this would need to be balanced against a potential reduction in tax revenue, it could support the government’s goals of boosting productivity, complement the valuable work of the NHS and increase workforce participation.”