# Insurance Premium Tax

url: https://whereyourmoneygoes.co.uk/insurance-premium-tax/
updated: 29 September 2026
licence: Our words, analysis, charts and derived calculations: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/), credit [Tekstak Ltd](https://tek-stak.co.uk). Figures: each source's own licence, listed under Sources.
publisher: [Tekstak Ltd](https://tek-stak.co.uk)

# Insurance Premium Tax



Last updated 29 September 2026.
Figures refresh every night. [How each figure is worked out](/methodology/).





**A tax on general insurance premiums, charged instead of VAT, which insurance is exempt from.** Anyone buying car, home, pet or travel insurance. It is included in the premium you are quoted, and most people have never heard of it. It raised **£9.0bn** in 2025–26, which is 1.0% of everything HMRC collects and 0.29% of the economy. That is up £154m (1.7%) on the year before.



Figures for the 2025–26 financial year. Source:
[HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk).





## Key figures



- £9.0bnRaised in 2025–26

▲
- 1.0%Of everything HMRC collects

▼
2025–26
- 0.29%Of the whole economy (GDP)

▼
2025–26
- -1.7%In real terms, against the 2024–25 peak

Adjusted for inflation with the GDP deflator
As of 6 April 2025
- 12%Standard rate

2.5% when introduced in 1994




Sources: [HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk), [HM Treasury](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp).





## What is the short version?



- **How big:** £9.0bn in 2025–26, 1.0% of everything HMRC collects; after inflation, 98% more than in 2015–16.
- **Latest change, 2015:** A period of rapid rises begins: 6% to 9.5%, then 10%, then 12% within three years.
- **Where it goes:** Nowhere in particular, like almost every tax: it is not earmarked.
- **The argument:** Without it, a large part of consumer spending would be untaxed; against that, it taxes prudence: people are penalised for insuring against risk.






## How much does it raise?




**Insurance Premium Tax receipts, cash and real terms**










**The numbers behind this chart**





| Financial year | Cash | Real, 2025-26 prices |
| --- | --- | --- |
| 2006–07Details | £2,314m | £3,788m |
| Real, 2025-26 prices£3,788m | | |
| 2007–08Details | £2,306m | £3,702m |
| Real, 2025-26 prices£3,702m | | |
| 2008–09Details | £2,281m | £3,531m |
| Real, 2025-26 prices£3,531m | | |
| 2009–10Details | £2,259m | £3,452m |
| Real, 2025-26 prices£3,452m | | |
| 2010–11Details | £2,400m | £3,606m |
| Real, 2025-26 prices£3,606m | | |
| 2011–12Details | £2,941m | £4,326m |
| Real, 2025-26 prices£4,326m | | |
| 2012–13Details | £3,021m | £4,368m |
| Real, 2025-26 prices£4,368m | | |
| 2013–14Details | £3,014m | £4,269m |
| Real, 2025-26 prices£4,269m | | |
| 2014–15Details | £2,965m | £4,142m |
| Real, 2025-26 prices£4,142m | | |
| 2015–16Details | £3,293m | £4,568m |
| Real, 2025-26 prices£4,568m | | |
| 2016–17Details | £4,861m | £6,610m |
| Real, 2025-26 prices£6,610m | | |
| 2017–18Details | £5,669m | £7,613m |
| Real, 2025-26 prices£7,613m | | |
| 2018–19Details | £6,196m | £8,135m |
| Real, 2025-26 prices£8,135m | | |
| 2019–20Details | £6,415m | £8,206m |
| Real, 2025-26 prices£8,206m | | |
| 2020–21Details | £6,307m | £7,667m |
| Real, 2025-26 prices£7,667m | | |
| 2021–22Details | £6,627m | £8,037m |
| Real, 2025-26 prices£8,037m | | |
| 2022–23Details | £7,341m | £8,318m |
| Real, 2025-26 prices£8,318m | | |
| 2023–24Details | £8,146m | £8,769m |
| Real, 2025-26 prices£8,769m | | |
| 2024–25Details | £8,883m | £9,189m |
| Real, 2025-26 prices£9,189m | | |
| 2025–26Details | £9,037m | £9,037m |
| Real, 2025-26 prices£9,037m | | |






Figures for the 2025–26 financial year. Source:
[HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk), [HM Treasury](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp).




It raised more than the year before, but the other taxes grew faster, so its share of the total fell. It raised more than the year before, but the economy grew faster, so its share of GDP fell.





**How "real terms" is worked out**



Real terms use HM Treasury's GDP deflator, rebased to 2025-26 prices. That is the
measure the Treasury and the OBR use for public finances; the consumer price index is the
right one for a shopping basket, not for the size of the state.






## How does it work?



Insurance is exempt from VAT, so Insurance Premium Tax was created to tax it anyway. The standard rate applies to most general insurance: motor, home, pet.

A higher rate applies to travel insurance and to insurance sold alongside certain vehicles and appliances, originally to stop retailers dodging VAT by bundling cover with the product.

Life insurance, permanent health insurance and reinsurance are exempt.

It is not shown separately on most quotes, which is why it is close to invisible despite raising billions.




| Rate | Charged | On |
| --- | --- | --- |
| StandardDetails | 12% | most general insurance: car, home, pet, business |
| Onmost general insurance: car, home, pet, business | | |
| HigherDetails | 20% | travel insurance, and insurance sold with certain vehicles and appliances |
| Ontravel insurance, and insurance sold with certain vehicles and appliances | | |





Rates: [GOV.UK, Insurance Premium Tax rates](https://www.gov.uk/guidance/insurance-premium-tax-rates).
Checked by hand 22 September 2026.








## How has it changed?




**Standard rate of insurance premium tax**








Each change in the standard rate since it was introduced. It has nearly quintupled; most of the rise came in three steps between 2015 and 2017.




**The numbers behind this chart**





| From | Rate |
| --- | --- |
| 1994 | 2.5% |
| 1997 | 4% |
| 1999 | 5% |
| 2011 | 6% |
| 2015 | 9.5% |
| 2016 | 10% |
| 2017 | 12% |









How it got here, and why each change was made:



- **1994**Introduced at 2.5% as a way of taxing a large exempt sector.
- **1997**A higher rate is added for travel and bundled insurance, to close a deliberate avoidance route.
- **2015**A period of rapid rises begins: 6% to 9.5%, then 10%, then 12% within three years.






## Where does the money go?



**Nowhere in particular.** Insurance Premium Tax is not earmarked. It goes into the Consolidated Fund and is spent on whatever the government of the day decides.



Because it is not earmarked, the only honest way to show what it pays for is by proportion. If
insurance premium tax receipts of £9.0bn were spent in the same proportions as all
public spending in 2025-26, they would break down like this. It is an illustration of scale,
not a statement about where those particular pounds went.




**If £9.0bn of insurance premium tax were spent like all public money in 2025-26**



- 1. Social protection, including the state pension

£3.0bn 33.2% of spending
- 2. Health

£1.9bn 21% of spending
- 3. Debt interest

£958m 10.6% of spending
- 4. Education

£922m 10.2% of spending
- 5. Economic affairs, including transport

£696m 7.7% of spending
- 6. Defence

£479m 5.3% of spending
- 7. Public order and safety

£407m 4.5% of spending
- 8. General public services

£262m 2.9% of spending
- 9. Housing and community

£163m 1.8% of spending
- 10. Environment

£145m 1.6% of spending
- 11. Culture, media and sport

£108m 1.2% of spending





Spending shares from HM Treasury’s Public Expenditure Statistical Analyses. An illustration of scale, not where these particular pounds went.




**Show as a table**





| Name | Equivalent share of insurance premium tax |
| --- | --- |
| 1. Social protection, including the state pension | £3.0bn |
| 2. Health | £1.9bn |
| 3. Debt interest | £958m |
| 4. Education | £922m |
| 5. Economic affairs, including transport | £696m |
| 6. Defence | £479m |
| 7. Public order and safety | £407m |
| 8. General public services | £262m |
| 9. Housing and community | £163m |
| 10. Environment | £145m |
| 11. Culture, media and sport | £108m |








See [for every £100 of tax](/for-every-100-pounds-of-tax/) for the full picture.





## Does it change what people do?



Insurers say higher rates increase the number of uninsured drivers, since motor insurance is compulsory but unaffordable cover is not. The evidence linking IPT rises specifically to uninsured driving is suggestive rather than conclusive, because premiums move for many reasons at once.



[When a tax rise stops raising money](/when-tax-rises-lose-revenue/) looks at the
cases where the effect has been large enough to move the revenue.





## What are the arguments?





### The case for it



- Without it, a large part of consumer spending would be untaxed.
- It is cheap to collect through insurers.
- The rate is still well below VAT.
- It does not apply to life or health cover.





### The case against



- It taxes prudence: people are penalised for insuring against risk.
- Motor insurance is compulsory, so it is an unavoidable charge on driving.
- It is invisible, which makes rate rises politically easy.
- It falls hardest on young drivers and high-risk areas, where premiums are already highest.






Both columns are set out as their strongest case, not as a preferred answer and a strawman. See
[how this site handles contested questions](/neutrality/).





## Common questions


Is there tax on insurance?
A tax on general insurance premiums, charged instead of VAT, which insurance is exempt from. Anyone buying car, home, pet or travel insurance. It is included in the premium you are quoted, and most people have never heard of it.How much does insurance premium tax raise?
£9.0bn in 2025–26, which is 1.0% of everything HMRC collects.Where does insurance premium tax go?
Nowhere in particular. Insurance Premium Tax is not earmarked. It goes into the Consolidated Fund and is spent on whatever the government of the day decides.





## Use this data



The figures belong to the bodies that published them and are used under their terms, listed in
[Sources for this page](#sources); most are Crown copyright under the Open Government Licence.
Only our own words, analysis, charts and derived calculations are ours, published under
[CC BY 4.0](https://creativecommons.org/licenses/by/4.0/): reuse them, including
commercially, if you credit [Tekstak Ltd](https://tek-stak.co.uk) and link back to this page.



### Download



- [Insurance Premium Tax receipts by financial year (CSV)](/data/receipts-insurance-premium-tax.csv)
[JSON](/data/receipts-insurance-premium-tax.json) HM Revenue and Customs: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)
- [Total HMRC receipts by financial year (CSV)](/data/receipts-total.csv)
[JSON](/data/receipts-total.json) HM Revenue and Customs: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)

- [All data, field definitions and licences](/data/)




### Embed the live figure



Paste this into your page. It updates itself every night and links back here.




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## Sources for this page





| Source | Publisher | Figures as of | Updated | Licence |
| --- | --- | --- | --- | --- |
| [HMRC tax receipts and National Insurance contributions for the UK](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk) | HM Revenue and Customs | the 2025–26 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [GDP deflators at market prices, and money GDP](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp) | HM Treasury | the 2025–26 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |





Each source's figures are used under the licence shown. Our own words, analysis, charts and derived calculations
are ours, under [CC BY 4.0](https://creativecommons.org/licenses/by/4.0/).

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Published by [Tekstak Ltd](https://tek-stak.co.uk). Our words, analysis, charts and derived calculations: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/), credit [Tekstak Ltd](https://tek-stak.co.uk). The figures belong to the publishers listed under Sources and are used under their licences. Figures last updated 29 September 2026.