In his Autumn Statement, The Chancellor, Philip Hammond, unveiled plans to raise insurance premium tax (IPT) to 12% from 1st June 2017, up from the 10% previously announced in the March 2016 budget. This impacts all Consumer and Commercial Insurance where IPT is payable.
The move is disappointing, as it is the latest in a series of increases in IPT in recent years. It has understandably been met with widespread criticism in the insurance industry, which now appears to be seen as a soft target to grow tax revenues.
The British Insurance Brokers Association (BIBA) said the rise in IPT was “outrageous” and will hit everyone, particularly the “just about managing” people. Huw Evans, director-general of the Association of British Insurers, said the increase was a bitter blow for the hard-pressed: “It will hit consumers and businesses alike”. Meanwhile Amanda Blanc, Axa UK’s CEO, said the rise was “an unwarranted attack on millions of people simply looking to protect themselves, their families and their key assets.”
In his second Budget on 16 March 2016, the then Chancellor of the Exchequer, George Osborne, sought to justify the hike by saying the revenue raised would provide extra funding for flood defences. This time round, Philip Hammond pointed to the government’s move to reduce compensation for whiplash injuries as a conciliatory measure – a move which the government claims could reduce car insurance premiums by £40.
About Towergate Insurance Brokers
Towergate Insurance Brokers is one of the largest, independently owned, Corporate and SME insurance brokers in the UK. Through our local team of trusted advisors and experts, we offer access to an extensive range of tailor-made insurance and risk management programmes. For more information on this Insurance Premium Tax increase please speak to your Account Executive.