IPT receipts edge up to £2.17bn in first quarter

Insurance Premium Tax (IPT) receipts reached £2.17 billion in the first quarter of the 2026/27 financial year, HMRC reported on 21 July. The figure for April to June 2026 was just £2 million higher than the same period last year, keeping the Treasury on track to beat the record £9.04 billion collected in the full 2025 fiscal year.

The Office for Budget Responsibility (OBR) has raised its forecast for IPT income by £500 million over the remainder of the decade, now expecting the levy to generate £57.3 billion for the government between 2025 and 2031. The persistent rise in receipts has reignited calls for a rate cut, particularly from those who argue cheaper insurance would encourage take-up of private health cover and ease pressure on the NHS.

Cormac Bradley, senior actuarial director at Broadstone, said that although premium inflation is starting to ease, many households and businesses are still facing higher renewal costs. He described insurance as “a vital safety net” and stressed that any new government plan to support household finances should include a discussion on insurance affordability.

The stealth tax burden and why calls for a cut are growing

Why IPT receipts keep climbing

The levy is a percentage added to almost every general insurance policy – 12% for most covers and 20% for travel, appliance and some vehicle insurance. Because it is a tax on the premium, any increase in the underlying cost of cover automatically swells the Treasury’s take. Over the past few years, insurers have pushed up premiums to reflect higher claims costs and broader inflation, which has mechanically boosted IPT revenue even though the tax rate itself has not changed.

A tax that now raises nearly £10bn a year

The latest OBR forecast underlines how entrenched IPT has become in the public finances. At £9.04bn in 2025 and with the first quarter of 2026 delivering £2.17bn, the levy is on course to break the £9bn barrier for a third consecutive year. For context, the £57.3bn projected over the next five years rivals what other consumption taxes yield, making a rate cut politically difficult despite the growing outcry.

Pressure for a reduction and the NHS link

The argument that lower IPT would boost private health insurance uptake has gained traction as NHS waiting lists remain long. With Andy Burnham’s government now in place, the debate is whether the Treasury will prioritise revenue or accept a short-term hit to encourage behaviour that could save the health service money later. Bradley’s call to frame insurance affordability as part of any household support package signals that the industry is ready for that conversation.

Winners and losers

The clear winner is the Exchequer, which collects roughly £1 in every £8 of premium on a typical motor or home policy. Policyholders and businesses are the losers, paying more for essential protection without any improvement in coverage. For a family renewing a £400 car insurance policy, IPT alone adds £48 – an amount that has crept up as premiums have risen.

How policyholders can manage the IPT hit

  • Check your renewal notice for the IPT line. Most personal policies carry a 12% rate. On a £500 home insurance premium, that’s £60 of tax – knowing the figure makes it easier to compare the total cost when shopping around.
  • Compare quotes every year. Because IPT is charged on the final premium, a lower-priced policy also reduces the tax you pay. A switch from £500 to £400 cover saves £12 in IPT alone.
  • Consider your health cover options carefully. If you rely on private medical insurance, watch for any government announcement on IPT rates. A future cut would lower bills, but the timing is uncertain – don’t cancel or delay cover based on speculation.
  • Businesses should budget for IPT as a fixed cost. With the levy likely to remain in place, factor it into your annual insurance spend. Even small premium savings from a broker review translate into immediate tax savings.