Insurers and brokers have responded furiously to the Chancellor’s decision to increase Insurance Premium Tax (IPT) from 10% to 12%.
In his Autumn Statement on Wednesday, Chancellor Philip Hammond said the latest IPT hike will be implemented in June 2017. It will be the third increase in just 18 months.
Justifying the latest increase, Hammond said IPT in the UK is “lower than in many other European countries” and is currently half the rate of value-added tax.
The British Insurance Brokers Association (BIBA) said the rise in IPT is “outrageous” and will hit everyone, particularly the “just about managing” people.
“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,” BIBA said in a statement.
Association of British Insurers director general Huw Evans echoed BIBA’s statement, calling the IPT rise “a hammer blow for the hard pressed”.
“It will hit consumers and businesses alike, hurting those who buy business, motor, property, pet and health insurance,” he said.
Evans also criticised Hammond for already claiming that the government’s proposed whiplash reforms will offset the IPT hike.
AXA UK chief executive Amanda Blanc said the tax rise “represents an unwarranted attack on millions of people simply looking to protect themselves, their families and their key assets.”
“This is a classic case of the Government giving with one hand, in the form of whiplash reforms, and taking with another,”
The Financial Times quoted Blanc as saying.
“The affordability of insurance is being fundamentally threatened. The country is already underinsured and ever rising insurance taxation could have the unintended consequence of making this situation even worse.”
British insurance giant
Aviva issued the statement: “You could say this is a tale of two governments: on the one hand, the government plans to reduce the cost of motor insurance through whiplash compensation reforms which will save motorists around £40 - £50 a year.
“On the other hand, we’re surprised by the announcement to increase the cost of insurance tax for a third time, which effectively doubles the amount of tax paid on insurance purchases in less than two years. It is deeply disappointing that those individuals and businesses who do the right thing by taking out insurance face this indirect tax rise.”
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Insurance Premium Tax to rise: Chancellor’s Autumn Statement
Fears over potential IPT hike to 12%
