Figures published by HMRC show that insurance premium tax receipts for July this year totalled £1.03bn. This was up from the £957m paid in the same month last year. In the first fourth months of this financial year, IPT receipts have totalled £3.2, an increase of £123m on the same period in 2024.

Cara Spinks, spokesperson at financial services consultancy Broadstone, said: “July’s IPT receipts once again show how quickly revenues from this tax are accelerating. It has become a reliable source of income for the UK government.”

The Association of British Insurers has labelled IPT as an unfair levy on a responsible purchase.

The AA has also raised concerns about IPT and said it prices people who can least afford it out of cover and may tempt them to drive without insurance.

In the last financial year, IPT generated record receipts of £8.88bn. This year, it is forecast to generate £9.2bn for government coffers.