Private health insurance hit

Budget and You

Tax relief on private health insurance for the over-60s is to be scrapped to help finance a reduction in Vat on fuel. Private health- care companies immediately claimed that the action, which affects more than 500,000 people, would put "intolerable pressure" on the NHS this winter as 100,000 more people would join NHS waiting-lists.

The tax relief, which was introduced in 1990, is being abolished because it has failed to achieve its original purpose of encouraging elderly people to take out private health insurance.

According to the charity Help the Aged, abolishing tax relief on private health insurance will affect only 5 per cent of people over the age of 60. A spokesman said: "Help the Aged is more concerned about seeing improvements to the NHS so older people will receive high quality, accessible and free health-care."

But a spokeswoman for PPP Healthcare, one of the country's largest provider of privatre health insurance, said: "Abolition of tax relief on private medical insurance for the over-60s will cost the Treasury an extra pounds 8.5m a year and will make an additional 600,000 people fully reliant on the NHS."