- Private Clients
One of the less anticipated moves in the recent Budget was the Chancellor’s raid on Insurance Premium Tax (IPT), which will be increased from 6% to 9.5% from 1st November 2015. This represents an increase in the rate by a staggering 58%!!
The new rate will affect policies ranging from House to Motor Fleet Insurance, and will hit households and businesses alike. By 2020 the increase (and who is to say that there may not be more hikes before then – Germany, for example, charges 19%) is expected to generate up to £1.5 billion a year for the Treasury.
Alarmingly, the Treasury tried to justify the increase by arguing that the cost of premiums had fallen for many families, and that Britain’s IPT was well below that of other countries.
The Chancellor said that the move would affect only one-fifth of all premiums, but the British Insurance Brokers Association slammed the move as a “stealth tax” on insurance policies that would hit millions of ordinary households and businesses.
Businesses will be hit alongside consumers, as the hike will apply equally to corporate insurance premiums. IPT was first introduced in 1996.
The damage of this Increase of IPT is worse than what could be expected. Is this rise of IPT going to cause businesses and individuals to decide that cover is simply too expensive and that they may as well go without Insurance? Business and Personal Lines clients alike have condemned the increase with many arguing that feel they are being punished for wanting to protect their earnings, their property, their workforces and business. Will this increase lead to more uninsured drivers? Is the Treasury just looking at it’s income potential and expecting consumers and insurers to absorb the costs rather than looking to support all of the good work to reduce the number of people without insurance?
For more information and to find out how this may impact your business please contact us.