Insurance premium tax will be increased to 9.5 per cent from next November the Chancellor has confirmed in today’s Budget.
The standard rate of IPT is currently 6 per cent.
Experts have predicted that such an increase in IPT, which covers all forms of insurance contract, could trigger more organisations to opt for self-funded healthcare schemes.
Association of British Insurers director general Huw Evans says: “Insurance Premium Tax is a tax on people and businesses at the point at which they buy a general insurance product. So it’s very disappointing to see a more than 50 per cent tax increase being imposed on consumers, especially when the insurance industry and Government has worked so hard in recent years to bring down the cost of essential insurance.”
JLT Employee Benefits head of flexible benefit Andrew Drake says: “Private Medical Insurance (PMI) is companies’ second biggest benefit spend behind pension. The extra 3.5 per cent insurance premium tax will add sizeable direct costs to employers.”
BIBA CEO, Steve White, says: “We are extremely disappointed in this rise in Insurance Premium Tax and will mean insurance will become more expensive for the public as a result. Those hit by this stealth tax will include the 20.1 million households with contents insurance; 19.6 million with motor insurance and 17 million with buildings insurance.
“The Government has been working with the industry to reduce the cost of insurance for consumers – including a summit chaired by the Prime Minister. It therefore seems counterintuitive to be taking measures which will add to the cost – effectively taxing protection.
“We hope the Government will review this rise and correct it in further budgets.”