Should The Government Increase Insurance Premium Tax (IPT) in its Upcoming Budget?
By Simon Millar, CEO, Albanwise Insurance Services
The Budget this week is likely to include some unpopular tax increases if reports in the press are to be believed.
One tax that affects just about everyone is Insurance Premium Tax (IPT), currently set at 12% on most classes of insurance, but 20% on Travel, Hire Car and Extended Warranty covers. In previous years we have warned that this could be a soft target for the Government of the day, not least because it is much higher in some other European countries. Finland, for example sets their IPT at 24% on Motor and Fire insurance, while Italy, The Netherlands, Germany and Greece all have levels significantly higher than the UK.
So, an easy target for a Government seeking to balance the books, but should they do it? Obviously, our policyholders and lessees in properties that we insure would say a resounding ‘No’, as would we – even with stabilising property rates, any increase in IPT has an immediate effect on the overall premium, and since its inception, the level of IPT has never been reduced.
The Association of British Insurers has been lobbying Government hard regarding the impact any increase in IPT would have on individuals and businesses alike, and we can only hope that the Government see reason and spare policyholders these additional costs. But with over £100 billion premium written across personal and commercial lines in the UK in 2023 according to the Bank of England, it may prove too tempting an opportunity.
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