Taxpayers in the UK find themselves increasingly besieged by a myriad of levies, with even pets bearing the brunt of the HMRC’s relentless tax regime, according to tax experts. Joe Neal, tax manager at Blick Rothenberg, highlighted the unprecedented burden faced by taxpayers, with record-breaking revenues reported by HMRC in various tax categories including income tax, National Insurance (NI), VAT, and inheritance tax.
The latest blow to household finances comes in the form of soaring insurance premiums, with taxes such as Insurance Premium Tax (IPT) reaching as high as 20% on certain policies. This sharp increase, now at 12% for many insurance types, represents a significant rise from a decade ago, exacerbating the financial strain on UK households already grappling with the ongoing Cost of Living crisis.
Despite the substantial impact of IPT on the majority of households, a staggering two-thirds of the population remains largely uninformed about this tax. HMRC’s tax receipts underscore the growing importance of IPT as a revenue stream, with income from this tax rising by 10% in the past year alone. Between April 2023 and January 2024, IPT contributed £6.5 billion to the Treasury, compared to £5.9 billion during the corresponding period in the previous year.
Cara Spinks, head of insurance consulting at OAC, noted the relentless upward trajectory of IPT collections, forecasting another lucrative year for the Treasury. With collections surpassing £6 billion in 2021/22 and £7 billion in 2022/23, projections indicate that this figure could exceed £8 billion in the current financial year.
Spinks further highlighted the burgeoning demand for health insurance products amid mounting pressure on the NHS, with both employers and individuals turning to private medical insurance and health cash plans. She emphasized the potential benefits of reducing or eliminating IPT on health insurance products, suggesting that such a measure could not only support economic growth by reducing economic inactivity due to chronic illness but also alleviate financial strain on households.
