Government IPT revenues exceed £3bn for first four months of 2024/25 financial year

Insurance premium tax (IPT) receipts to His Majesty’s Revenue and Customs (HMRC) topped £3bn for the first four months of the 2024/25 financial year, according to new government data released yesterday (21 August 2024). 

In the data, HMRC showed that IPT receipts for the period April to July 2024 reached £3.07bn – a rise of 11% from the same period last year, when receipts reached £2.76bn.

In July 2024, receipts also reached £957m, rising from £884m in the same month last year. 

IPT is a tax on the price of an insurance product and functions as an indirect tax on consumers and businesses that is collected by insurers and paid to HMRC. The current rate sits at 12%. 

When IPT figures for the 2023/24 financial year were released back in April this year, actuarial consultancy OAC told Insurance Times that the full year figure represented a “record breaking” amount.

Figures for this year are already suggesting that this record will be broken again in 2024/25.

Cara Spinks, head of insurance consulting at OAC, commented: ”IPT continues to deliver substantial receipts for the Treasury, as premium inflation continues to impact a multitude of sectors and products. 

“The chancellor’s desire to find alternative revenue streams to reduce the size of the UK’s fiscal ‘black hole’ suggests a reduction in IPT is unlikely at the Autumn budget. However, given this administration’s focus on growth, it is an area we would encourage them to scrutinise carefully.” 

A regressive tax

Biba has long campaigned for a reduction in the rate of IPT, with its its 2024 manifesto, entitled Managing risk for growth and economic security arguing that government could afford to cut the rate substantially while removing “a barrier to the the take up of adequate insurance”. 

Speaking to Insurance Times, Biba chief executive Graeme Trudgill said: ”IPT is a regressive tax that hits the most vulnerable hardest at a time when people and businesses have been impacted by multiple and sustained cost of living pressures.

“With IPT receipts at a record high, we are continuing to urge the government to cut the deadline rate from 12% to 10% to facilitate better resilience for individuals and businesses alike, so supporting the economy for future growth.”