Tax rate remains unchanged
Chancellor John Healey left insurance premium tax unchanged in his first Budget, prompting the British Insurance Brokers’ Association to renew its call for a commitment to freeze the levy for the remainder of this Parliament. Graeme Trudgill, chief executive of BIBA, stated that the decision offers relief to households and businesses under financial pressure, but noted that the tax remains at 12p in every pound of premium. IPT is charged at a standard rate of 12% on most general insurance premiums, with a higher rate of 20% applied to certain products such as travel insurance. The Office for Budget Resources projects total IPT receipts to reach £57.6bn over the six years leading to 2030/31, following a record £9.04bn collected in 2025/26.
Workplace health cover concerns
Industry figures have raised concerns regarding the taxation of health benefits. Health cash plans and private medical insurance continue to attract the standard 12% IPT rate, alongside income tax for employees and National Insurance contributions for employers. Representatives from Westfield Health and Broadstone noted that the tax system offers little incentive for employers to invest in workforce health cover, particularly as the National Living Wage is set to rise by 3.9% to £13.21 an hour next April.