2% hike in IPT ‘unwelcome’
In his first Autumn Statement, Philip Hammond pulled a shock tax rise out of the bag without prior notice. He raised Insurance Premium Tax (IPT) to 12%; the third rise in less than 2 years and, according to the British Insurance Brokers’ Association, a rise of 66% in just 15 months!
The news has been generally slammed by many, and Mike Dickinson, sales and marketing director at Russell Scanlan, fears the speed and frequency of the tax rises means the rate could creep up to the same level as the 20% VAT rate.
Mike said: “This latest 2% rise in IPT is not likely to be the last. This is a stealth tax which will help undoubtedly boost the Treasury’s coffers. Policyholders have seen an eyewatering increase in IPT in a relatively short space of time. These rises, in this very tight timeframe, are dramatic and our fear is that the IPT rate is heading towards that of the 20% VAT rate. This latest rise is not good news for policyholders and certainly gets the thumbs down from us.
“The Chancellor also announced a crackdown on false whiplash insurance claims which would save motorists an average of £40 a year. However, I don’t think motorists should jump for joy out of their driving seats just yet. This is likely to take time to work through the system before any benefits are seen, and I question whether the reduction in insurance costs is as high as the Chancellor suggests.
“Also, in my view it would be difficult for the government to attribute any potential reduction in premium to this type of claim. However, the announcement is welcome and it will be interesting to see how it will be implemented.”