Discussion on Potential Increases in IPT by Broadstone Unveiled
The Insurance Premium Tax (IPT), a significant source of revenue for the UK Government, has seen a significant increase in receipts, according to the latest HMRC data. Compared to the same period last year, IPT receipts have risen by 11%, reaching £3.07 billion in the first four months of 2024/25.
This increase in IPT receipts is enough to fund a substantial portion of a winter fuel payment to pensioners, as the government grapples with strained public finances. However, the Chancellor of the Exchequer, currently Rachel Reeves, is being urged to resist the temptation of further increasing IPT in the upcoming Autumn Budget 2025.
IPT acts in the opposite way to many taxes, punishing those who do the right thing rather than serving as a punishment or deterrent. An increase in IPT could potentially lead to lower take-up of benefits like Private Medical Insurance (PMI) and health cash plans due to increased costs for both employers and employees.
For company-funded health benefits, an increase to IPT would have a 'double whammy' impact, increasing costs for employers and employees' P11d tax liabilities. Brett Hill, Head of Health & Protection at Broadstone, warned against potential increases to IPT, stating that increasing taxes on the private health sector could prove counter-productive for the UK economy due to recent increases in economic inactivity due to long-term illnesses.
The Government is also exploring further revenue-raising measures, with the upcoming Labour Budget expected to include more taxes and frozen or cut thresholds. Leading political figures have already called for increased taxation on private medical services.
Despite these calls, the backlog in NHS waiting lists remains significant after rapid increases in the wake of the global pandemic. NHS waiting lists have seen improvements, falling by over a quarter of a million people since the General Election, but remain at unprecedented levels.
As the Autumn Budget 2025 approaches, the decision regarding the increase of IPT will be a crucial one for the UK Government, with potential implications for both the public and private health sectors.
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