“We are relieved to note HM Treasury’s decision not to increase Insurance Premium Tax (IPT) in the Autumn Budget - however, we are calling on the Government to consider the wider implications of generating revenue from IPT and to commit to making health insurance exempt from the tax.”
That was the reaction from AMII – the Association of Medical Insurers and Intermediaries (AMII) – after the Chancellor Philip Hammond maintained IPT rates at the current level of 12%.
Stuart Scullion, Executive Chairman of AMII, said: “While we are relieved that Philip Hammond has observed the resistance from our industry to Insurance Premium Tax (IPT), we are calling on the Government to make healthcare spend exempt from this tax like other zero-rated insurance products such as life or critical illness.
“It is now apparent that previous hikes in IPT have driven thousands of policyholders to cancel or downgrade their health cover, costing the National Health Service (NHS) £126m, according to new research by Bupa and economics consultancy Cebr. “It is vital that the Government considers the wider implications of generating revenue from IPT, particularly in relation to the costs to the NHS.
“IPT has a greater impact on people who have the most need to keep their health insurance, such as older individuals with riskier health profiles who pay higher premiums. These are the people being forced back into using NHS services as the cost of their PMI becomes unsustainable.
“At the same time, the Government should be encouraging employers to better support staff with healthcare, but employees in companies with health benefits are effectively taxed twice (a tax on the employer paying the premiums and also on the employee under P11d rules). Rather than incentivising employers to offer health benefits to staff, this discourages this type of support
“The government should be encouraging the purchase of PMI as a means of reducing the strain on an already overstretched NHS, not pushing thousands of people back
“The Government needs to reappraise how health insurance and cash plans are treated in the fiscal system and AMII will be making further representations to express the views of our industry.”