The Chancellor’s decision to increase the Insurance Premium Tax (IPT) to 12% continues to receive backlash from insurers.
The Association of British Insurers (ABI) is now disputing the Chancellor’s justification for the recent hike: that IPT in the UK is lower than in many other European countries.
Citing the latest European insurance industry data, the ABI claimed that the UK had the eighth highest IPT standard rate in the European Union prior to last week’s Autumn Statement announcement.
According to the ABI, the UK now has the sixth highest rate in the region following the recent IPT hike, ranking above Austria and Malta for the first time.
The industry body further noted that the UK also has a higher rate of 20% for travel, hire car and extended warranty insurance.
“UK consumers and businesses already pay relatively high levels of IPT, and the latest increase puts us even closer to the top of the table in Europe,” said ABI director general Huw Evans.
“It cannot be right that people are being forced to pay an increasingly high price for doing the responsible thing and buying insurance,” he added.
The ABI said that increasing IPT to 12% raises around £13 billion over five years, making it one of the biggest revenue-raising measures in recent fiscal events.
“Having now increased IPT three times in 18 months, it is time for the Government to look elsewhere to help meet the formidable fiscal challenges it faces,” Evans said.
Related stories:
Where does IPT hike leave insurance premiums?
Furore over latest Insurance Premium Tax hike
