Government Considers Insurance Premium Tax Rise

It is expected that the new Conservative government will increase the rate of Insurance Premium Taxation (IPT) in the next Budget. The rate, currently standing at 5%, is expected to rise to 10% and will net the government around £6 billion in revenues.

It is expected that the new Chancellor of the Exchequer, George Osborne, will increase the premium tax on a number of insurances across the board, including car, home and private health insurance.

The Association of Medical Insurance Intermediaries (AMII) have stated concerns over the unexpected consequences of this action, especially given the protection gap that already exists in the United Kingdom.

Quite rightly, the AMII argue that increasing the cost of private medical insurance will only push people away from private healthcare and into the care of the National Health Service (NHS).

At a time when the government are trying to reduce government spending in order to tackle the budget deficit it makes very little sense to increase the burden on the already stretched NHS.

Government caution needed

The simple reality is that an increase in tax will directly increase the cost of private healthcare insurance and will therefore lower the demand for this type cover. In turn, with a lower number of people holding private insurance there will be a switch in demand for healthcare from private health facilities to the National Health Service (NHS).

Naturally, to service an increased number of patients the NHS will not only need more doctors, nurses, managers and administrators but it will also need more beds, medical equipment and possibly even more hospitals.

In this sense the government really needs to think carefully about the impact of increasing premium taxation on medical insurance.

It may well be the case that the extra tax revenue gained is significantly outweighed by the cost associated with treating an increased number of patients on the NHS. It may actually be the case that the Treasury are better off removing the premium tax on health cover altogether.

I had a great experience with Drewberry, they have a lot of knowledge and expertise with life insurance and income protection and were able to advise me and arrange suitable products. Highly recommend.

Lachlan Mellings
12/08/2020
Reviews.co.uk Logo
Compare Top 10 UK Insurers
Takes approx. 60 seconds

Or call us on 0208 432 7333

Compare Top UK Insurer Quotes Logos
Contact Us
Head Office & Pensions and Investments
Senator House
85 Queen Victoria Street
London
EC4V 4AB
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Brighton
BN1 6AF
Drewberry London Office MapDrewberry Brighton Office Map
Our Core Principles
  • 1You Come FirstWe are a client focused business who always aim to put you first.
  • 2We are ExpertsTo provide you with the best advice, we need to know our stuff!
  • 3We are HumanWe are real people with feelings who are here to help you.
  • 4We are ProfessionalProviding a 5-star service requires a professional approach to everything we do.
  • 5We are here to EducateWe don't believe in sales, we are here to educate so you can make informed decisions.
Finalist - Moneyfacts AwardsFinalist - Cover Excellence AwardsHighly Commended - Protection Review Awards
Proud member of AMII (Association of Medical Insurers & Intermediaries)Proud member of Money Advice ServiceProud member of UnbiasedProud member of BIBA (British Insurance Brokers' Association)

If you are unhappy with our service, we have a complaints procedure, details of which are available upon request. If you are unhappy with how your complaint has been dealt with, you may be able to refer your complaint to the Financial Ombudsman Service (FOS). The FOS website is www.financial-ombudsman.org.uk.

Drewberry Ltd is registered in England and Wales. Companies House No. 06675912

Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

Drewberry Ltd (Financial Conduct Authority No. 505473) is an Appointed Representative of Quilter Wealth Limited and Quilter Mortgage Planning

Limited, which are authorised and regulated by the Financial Conduct Authority.

Cookie Use

Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacycookie policy.