The little-known levy raking in more revenue than inheritance tax

The Treasury raked successful a record-breaking £8.8bn from a little-known taxation connected security premiums – arsenic NHS delays forced taxpayers to spell private.

Insurance premium taxation raised adjacent much than inheritance taxation successful the archetypal 11 months of 2024-25 – beating past year’s all-time precocious of £8.1bn.

The taxation applies to astir security premiums. Income from it has surged arsenic NHS waiting lists person fuelled a roar successful backstage healthcare.

Cara Spinks, of consultancy Broadstone, said: “Rising economical inactivity owed to semipermanent unwellness and NHS waiting lists has seen individuals, and employers progressively crook to the security assemblage to supply wellness and wellbeing support, which successful crook has accrued premium income and taxation receipts.”

A modular 12pc complaint applies to home, wellness and favored security portion a higher complaint of 20pc applies to question security arsenic good arsenic security for cars and home appliances.

Providers wage the tax, but typically walk the outgo connected to consumers, adding £72 to an yearly premium worthy £600.

The Institute for Fiscal Studies said past twelvemonth that security fees “are present acceptable acold excessively high”. The modular complaint has been frozen since 2017 erstwhile it roseate from 10pc to 12pc.

Thousands person relied connected backstage healthcare for life-changing country and diagnostic tests. The fig of backstage infirmary admissions funded by security surged to implicit 160,000 successful the 2nd 4th of 2024, up from 130,000 successful the aforesaid play successful 2021.

Meanwhile, astir 1 successful 8 present person aesculapian insurance, according to backstage healthcare analysts LaingBuisson.

Insurance premium taxation raised £1.3bn successful February alone, bringing the full raised truthful acold successful 2024-25 to £8.8bn, according to the latest information from HM Revenue and Customs.

Yet galore households bash not cognize it exists. Over 2 thirds person small to nary consciousness of the charge, according to the Association of British Insurers.

Meanwhile, inheritance taxation has raised £7.6bn successful the archetypal 11 months of 2024-25, already beating past year’s grounds of £7.5bn.

However, the Office for Budget Responsibility is forecasting inheritance taxation receipts volition soon overtake those of security premium taxation owed to rising spot values, frozen thresholds and pension taxation changes.

By 2029-30, bereaved families volition wage astir £14bn a twelvemonth successful decease duties, whereas security premium taxation volition make astir £10bn successful revenue.

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