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Insurance Premium Tax rises again - where will it end?

The impact for businesses - Thursday, Mar 17, 2016

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J Bennett & Son Business Insurance Premium Tax

Insurance Premium Tax commonly referred to as IPT is a tax by the Government on general insurance premiums, including business, property, motor and home insurance.

 

The rise in the March 2016 budget comes hot on the heels of the last one in November when it rose from 6% to 9.5%. Some suggest, including the AA, that it is a tax on motorists, however the impact is more strongly felt by British businesses

 

Steve White CEO of BIBA (British Insurance Brokers Association) said, "We are extremely disappointed in this rise in IPT and this will mean insurance will become more expensive for the public as a result. Those hit by this stealth tax will include the 20.1 million households with contents insurance; 19.6 million with motor insurance and 17 million with buildings insurance."

 

What we know:

1 This is Insurance Tax, not VAT so it cannot be passed on, or recovered by businesses.

2 Insurance Companies cannot absorb the cost and we all have to pay.

3 The Government stated it is to go towards those affected by flooding, despite the Government’s lack of support of UK flood defences

4. It’s a classic stealth tax. The Revenue collected over £3billion from the UK population in the 2013 – 14 tax year when the rate was 6%.

5. It only went up 4 months ago from 6% to 9.5%. The cost of implementation is enormous why was it not increased to 10% in November?

6. The Revenue will collect an estimated 5 billion in 2016 – 17

 

Where will it end, are we seeing a future trend?  With the average rates across Europe already higher (Germany 16%, France 18% and Finland 24%) you can see why there is speculation that the rate is heading towards 20%

 

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