Eight days from now the Chancellor delivers his Budget, and one of its most reliable revenue lines will barely be mentioned.
Insurance premium tax raised £9,037m in 2025 to 2026, up 1.7% on the year before, according to the HMRC IPT bulletin. In 2016 to 2017 it raised £4,861m. HMRC links the growth to higher premiums and more activity across the market, and partly to the standard rate rises of 2015, 2016 and 2017. The standard rate is 12%, with 20% on travel cover, and neither moved last November, as Insurance Business noted in August.
This week Broadstone asked the Treasury to scrap the tax on health insurance, arguing it makes employer-funded prevention dearer just as ministers want fewer people leaving work through ill health. The Insurance Business report points out that employers cannot reclaim it the way they reclaim VAT, that HMRC does not publish how much comes from health cover, and that Broadstone has not costed its proposal.
Here is my problem. The tax follows the price of cover, not the rate. When claims costs pushed premiums up, the Treasury took 12% of every standard-rated increase without voting for anything. Now home cover is 4.4% cheaper than a year ago, according to Insurance Business, and receipts for April and May 2026 came in 0.5% lower than a year earlier.
For insurers, that makes IPT a quiet multiplier on claims inflation. Every pound of cost passed into premium arrives at the customer with tax on top, and every pound of relief in a softer market is shared with the Exchequer before the customer sees it.
A freeze is the likeliest outcome on 28 October. If the Chancellor does move, health cover is the narrowest and most defensible place to start, and the cost of doing so is a number HMRC can publish rather than leave everyone to guess.