As a way of combatting a decrease in the money the government takes from fuel duty, there is a real concern in the insurance industry that Phillip Hammond plans to put a rise in Insurance Premium Tax in his next budget.
IPT, which currently stands at 12%, is a tax on premiums paid by the policyholder.
It has already risen in the considerably in the last two years; doubling from 6% to 12%. That, according to BIBA shows an increase larger than that of tobacco and alcohol duties.
Romero Insurance Brokers suggest that any rise in IPT would be grossly unfair and potentially dangerous.
Insurance is vital for any business, no matter the size, and an increase in costs could squeeze some bottom lines to breaking point. Or even more worryingly, some would avoid paying for insurance altogether.
You shouldn’t be penalised for doing the right thing.
It’s wrong to penalise people for doing the responsible thing, which is why we’re calling for an end to rises in Insurance Premium Tax. Because #IPTsUnfairhttps://t.co/NIMVCEu3DE pic.twitter.com/1kw4HgrQUK
— ABI (@BritishInsurers) October 10, 2018
There have already been calls from insurer, Ecclesiastical and the Charity Finance Group to make charities exempt from paying the tax. But if it’s unfair for charities to pay IPT, detractors could also argue that it’s unfair for 3rd sector contractors, businesses with low profits and those with high premiums after a series of no-fault claims, to pay.
Romero MD, Simon Mabb, had these words on the matter:
“The government have increased the Insurance Premium Tax rate in the last few years from the original 2.5% when first introduced to 12%. This has been an extra source of revenue for the tax man but this is now affecting customer’s insurance purchasing decisions which can’t be right. The 12% rate is excessive and on motor business the government is taking more in tax than the broker that is arranging the cover, advising the customer on cover and assisting with claims. The broker is also having to fund regulation costs from their income as well. We regularly see customers that need specialist covers, for example, flood cover, that are just priced out of taking this with the additional 12% tax on top. Likewise a young driver paying £2,000 for their insurance premium is paying a further £240 in Insurance Premium Tax.
There is talk of the government looking to raise this 12% higher still in the next budget and this is something we all need to be vocal about. The insurance industry and the end customers alike. At the end of the day it is wrong to penalise people for doing the responsible thing, which is why we’re calling for an end to rises in Insurance Premium Tax which is a tax on the consumer not a tax on insurers as has been portrayed by the government with previous increases. ”
If you feel as strongly as we do about freezing IPT, it’s important that you lobby your MP and make your voice heard. This proposed rise is unfair and anti-growth, and must be stopped.
You can follow the #IPTsUnfair hashtag on Twitter for the latest updates.