In the Chancellor's Autumn Statement, it was announced that Insurance Premium Tax (IPT) will rise from 10% to 12% in June 2017.
This is the third rise in 18 months and will affect those who purchase commercial insurance, home and motor insurance, private medical insurance and cash plans.
It's anticipated that IPT will raise £680m in the 2017/18 tax year.
IPT was first introduced on 1 October 1994 and a rate of 2.5% was charged. Below is a plotted history of the increases since 1997:
- 1 April 1997: the rate increased to 4%;
- 1 July 1999: the rate increased to 5%;
- 4 January 2011: the rate increased to 6%;
- 1 November 2015: the rate increased to 9.5%;
- 1 October 2016: the rate increased to 10%;
- 1 June 2017: the rate will increase to 12%
On 23rd November, BIBA (The British Insurance Brokers' Association) said:
'Over the past 15 months, policyholders have already seen an increase of 66% in the Insurance Premium Tax (IPT) they pay – this further increase to 12% in this regressive tax is outrageous and is a tax on protection which will hit everyone and especially those ‘just about managing’. We believe that this increase is contrary to the stated policy of HM Revenue and Customs “that IPT should make the required contribution to HM Government revenue while minimising the effect on the take up of insurance”. This increase comes at a time when both motor and home insurance premiums are rising and our fear is that many of those who most need it will avoid taking up insurance and be unable to afford the protection they need.'
Artemis Insurance Brokers will help our clients to consider how they might mitigate this increase by considering higher excesses/deductibles and more effective risk management.
RICHARD J. CLIFFE - Sales & Marketing Manager
