An appeal has been made to the Chancellor by the Association of British Insurers (ABI) to leave the Insurance Premium Tax (IPT) alone in the upcoming Budget.
Last April’s Budget saw a hike in the IPT rate from 6% to 9.5% and is anticipated to add an extra £100 to the annual cost of insurance for many households, raising more than £8 billion.
In advance of the Chancellor’s Budget on 16 March, the ABI is warning that IPT should not be seen as a ‘soft touch tax’ to raise revenue as any increase leads to a further financial squeeze on millions of households and businesses who have done the right thing by taking out insurance.
Penalities of Insurance Premium Tax
James Dalton, Director of General Insurance Policy at the ABI, said: “Insurance Premium Tax penalises the millions of people and businesses throughout the UK who do the right thing by taking out insurance to protect themselves against life’s expensive uncertainties.
“At a time when personal injury costs are pushing up average motor insurance premiums, a further hike in IPT is the last thing the UK’s hard pressed motorists need. And with the Government keen to encourage less reliance on the state, any move that raises the cost of private medical insurance would be counter-productive.
“The UK insurance market is highly competitive, but affordable insurance cannot be taken for granted. IPT should not be seen as a soft touch by the Chancellor, as further increases will hit people in the pocket hard, or even worse could see people starting to reduce or drop their cover altogether.”