IPT Rise To Double Digits
The Chancellor increased insurance premium tax once more to 10 per cent, to the dismay of the insurance industry and wider business community. Bryan Banbury, managing director at Russell Scanlan, has been looking at how this latest rise is adding insult to injury, and potentially penalising those that have only just seen a hike in premiums, following the IPT rise from 3.5 per cent to 9.5 per cent last November. Is this really a Stealth Tax?
The 0.5 per cent rise is another bitter pill to swallow, pushing the IPT rate into double digits and proving to be a step too far for some – making it too expensive for some to protect themselves, their assets and businesses.
At the time of the budget announcement, The Chancellor explained the rise in IPT would go towards investment in flood defences. But while investment in flood risk is to be welcomed, targeting particular groups with an increase in tax is basically robbing Peter to pay Paul. It’s an unwelcome tax rise so soon after the 3.5 per cent rise in November 2015.
James Dalton, Director of General Insurance Policy at the ABI also warned: “Another increase in Insurance Premium Tax would be a raid on the responsible that laser targets those who do the right thing. It will hit those on low incomes and increase the risk that some people reduce their cover or stop insuring altogether.”
The rise can only have a negative impact on those considering whether or not to insure, putting their businesses, and sometimes their livelihoods at risk. The pace of the rises has been unexpected and certainly stealthy – a tax by any other name.