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Methodology note

Offer private healthcare tax relief: calculation note

Assumptions behind the Offer private healthcare tax relief scenario. Implementation detail is incomplete, so uncertainty is explicit.

View main policy page: Offer private healthcare tax relief

Central fiscal result

+GBP 3.5bn - Net fiscal impact in 2027-28

Low case: +GBP 1.0bn. High case: +GBP 8.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Eligible private healthcare and insurance receives 20% tax relief.
  • Relief applies to households and possibly employer schemes.
  • No automatic NHS budget saving is assumed.
  • Supply constraints are included in the uncertainty range.

Affected population

  • Affected units are insured households, employers, insurers and providers.
  • ABI reports rising private health claims and workplace cover.
  • Higher-income households are more likely to benefit.
  • NHS patients are affected only if capacity shifts.

Gross impact

  • Central cost assumes GBP 17.5bn eligible spend times 20%.
  • Low case assumes narrow eligibility and some NHS offset.
  • High case assumes employer schemes and price growth.
  • Deadweight spending is included in the central cost.

Fiscal build-up, central case

  • Tax relief on private spending: +GBP 3.8bn
  • NHS substitution savings: -GBP 0.4bn
  • Administration: +GBP 0.1bn
  • Administration and uncertainty: +GBP 0.0bn

Central net impact: +GBP 3.5bn in 2027-28.

Behaviour and pass-through

  • Low case assumes relief induces some genuine NHS substitution.
  • Central case assumes substantial deadweight subsidy.
  • High case assumes premiums rise and employer schemes qualify widely.
  • Private-sector staff demand may worsen NHS labour constraints.

Phasing

  • 2026-27: +GBP 0.8bn. Preparation or partial implementation.
  • 2027-28: +GBP 3.5bn. Main scenario year.
  • 2028-29: +GBP 4.0bn. Behaviour and pass-through develop.
  • 2029-30: +GBP 4.5bn. Steady-state uncertainty persists.

Main source groups

  • S1: Reform Contract defines the 20% relief.
  • S2: ABI data show private health insurance claims and coverage growth.
  • S3: NHS workforce data frame capacity constraints.
  • S4: Health economics evidence cautions substitution is not automatic.
  • S5: No official Reform eligibility schedule was found.
  • S6: Private-insurance demand studies inform take-up and NHS-substitution assumptions.