Sue Weir, CEO of Medicash, has called on George Osborne to make insurance premium tax (IPT) exempt on all healthcare insurance products.
As a result of the Chancellor of the Exchequer’s post-election Budget, there has been a massive increase of 58% in the IPT rate from six per cent to 9.5%. It came into force on 1st November 2015.
Weir believes that the hike could substantially hurt healthcare in the UK. According to LangBuisson, as it stands, there are currently 6.5million people with health cash plans and private medical insurance.
If companies and individuals no longer make their own healthcare plans as a result to this, the already swelling pressure on the NHS will only increase.
Speaking at a CBI dinner in Manchester last night, she said: “The government is looking to improve productivity rates within businesses so this seems to be a complete anomaly. Businesses should be encouraged to offer healthcare insurance to their employees, not put off from doing so by adding a tax uplift. Business productivity across the UK will be affected as absenteeism increases due to health issues have a negative impact on the long-term economic wellbeing of the nation.
“IPT is currently a very low profile tax, hardly ever talked about and rarely on the public and media’s radar. How many people actually know of its existence, let alone what it is? Yet this tax affects most individuals, families and businesses in the UK. It has been raising over £3billion for HM Treasury each year prior to this latest hike, which the Government estimates will raise an additional £1.75billion revenue per annum.
“However, its estimates will prove to be a lot less if businesses move to IPT exempt solutions, which the larger employers could do, and individuals just stop paying for their own private healthcare products altogether. Economically the tax on healthcare insurance makes no sense as the sums just don't add up.
“Life insurance, permanent health insurance (income protection) and all other ‘long term’ insurance are exempt from IPT, and healthcare insurance products must be included in that category.
“Also, it is inappropriate to compare motor insurance, a compulsory purchase if you wish to stay on the roads legally, with an optional type of insurance that people and employers may choose to buy which focuses on health and directly supports the NHS.
“My big fear is that IPT could eventually end up being one of those taxes that is easy for a government to increase every year, like duty on alcohol and cigarettes, causing even greater reductions to the number of healthcare insurance products purchased year on year."
“Simply, healthcare insurance products should be in the same category as the other ‘long-term’ insurances such as life and permanent health insurance, and we urge the Chancellor to make the necessary change to benefit the NHS, employers, employees, private individuals and families for financial and resource reasons.”