Insurance Premium Tax (IPT) receipts rose to £8.88 billion in the 2024 to 2025 financial year, according to figures released by HMRC.
The total represents an increase of £737 million, or 9%, compared to the previous year’s £8.15 billion.
Over a five-year period, IPT revenues have grown by 40%, rising from £6.31 billion in 2020 to 2021. Compared to a decade ago, receipts have increased by 170%, from £3.29 billion in 2014 to 2015.
The most recent quarterly data also shows £2.17 billion in IPT receipts during the first quarter of the 2025 to 2026 financial year, up £55 million (2.6%) from the same period a year earlier.
Ewen Tweedie, actuarial director at consultancy Broadstone, said the latest figures underline IPT’s growing role as a revenue stream for the Treasury. He noted that demand for health insurance products, including private medical insurance and cash plans, has contributed to the rise, driven in part by limited access to NHS services.
Tweedie said that employers are increasingly providing private health cover to maintain workforce productivity, especially as treatment delays impact employee health. He added that while the demand for such products is growing, the added cost of IPT risks reducing affordability, particularly for small businesses and lower-income households.
He suggested that the government consider a targeted IPT exemption for health insurance to help maintain access to independent healthcare and ease pressure on public services.
Insurance Premium Tax is applied to most general insurance policies in the UK. The standard rate is 12%, with a higher rate of 20% applied to travel insurance, appliance cover, and some motor insurance sold with breakdown assistance.
The tax is paid by insurers but is typically passed on to consumers through higher premiums. IPT has become a significant and growing source of revenue, despite remaining outside the scope of VAT. Unlike many taxes, IPT has not been subject to regular rate increases in recent years, but growth in the volume and value of insurance policies continues to drive revenues upwards.
