It’s Budget time today, and calls to reduce the Insurance Premium Tax (IPT) rate, or at least freeze hikes, just keep coming. It looks like Chancellor Philip Hammond is not about to hear the end of it unless he brings good news.
We previously told you about the
TaxPayers’ Alliance urging the government to cut IPT, saying “it cannot be right” to make buying insurance more expensive for taxpayers. Now the British Insurance Brokers’ Association (BIBA) has reiterated its stand that the rate should be brought down, hammering home the “very real” impact of what it described as a regressive insurance tax.
Citing its recent Budget submission to HM Treasury, BIBA said any further increase would make things worse. In its submission the trade group highlighted two particular areas of cover negatively impacted by rises in IPT: motor and flood.
“On August 2017 the Motor Insurers Bureau (MIB) – the official body set up to deal with uninsured driving – reported that for the first time in more than a decade, they saw an increase in the number of claims made following accidents with uninsured drivers,” read part of BIBA’s submission. “This increase was a significant 10%.”
It continued: “The majority of industry experts including BIBA and large brokers like the AA attribute this increase in uninsured driving directly to the doubling of IPT, from 6% to 12% in a 20-month period up to June 2017.”
In terms of flood, BIBA pointed out that those living or operating in high-risk areas are also heavily affected by IPT hikes.
“Often, these communities face difficult decisions as to whether they can afford flood insurance or to forgo cover. An increase in the cost of insurance further puts insurance out of the reach of many, especially those outside of the scope of Flood Re,” it told HM Treasury.
Ahead of today’s Budget, BIBA chief executive Steve White reiterated: “IPT is a tax on protection and the UK has one of the highest levels of premium tax in Europe, yet our insurance sector also has one of the biggest costs of regulation. We believe that IPT is now at a level that is contrary to HMT’s policy that it should make the required contribution to Government revenues while minimising the effect on the take-up of insurance.”
“We have seen a 100% increase in tax and this is without doubt beginning to bite at a time when motor premiums, in particular, are rising as a result of continued fraud and the March change to the personal injury compensation discount rate,” noted BIBA executive director Graeme Trudgill.
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