Chancellor hit for ignoring calls to scrap IPT hike

Chancellor Philip Hammond on Wednesday delivered his first budget which allayed some of the fears of the industry as there was no announcement of a further increase in Insurance Premium Tax (IPT).

 

Hammond, however, is receiving criticism over his perceived inaction on the entire IPT issue as he failed to address the industry’s calls to cancel the proposed rate surge to 12% that will take effect in June.

 

“It feels like there was an opportunity missed in today’s Budget to make the cost of running a car more affordable – particularly for young drivers,” Simon McCulloch, a director at Comparethemarket, was quoted as saying in a report by City A.M.

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“IPT has been hiked three times in the past 18 months, adding an average of £109 to annual insurance costs,” McCulloch told the publication. “On top of this, we estimate recent changes to the Ogden [discount] discount rate could add almost another £60 on average, and a massive £107 for drivers under 25.”

 

Earlier, the Chartered Insurance Institute said that it was “very disappointed” with Hammond’s decision not to use the Spring Budget as an opportunity to address the “unfair levels” of IPT.

 

Meanwhile, in its response to Hammond’s speech, the British Insurance Brokers’ Association (BIBA) again called IPT “regressive” and a “burden on businesses and individuals.”

 

“We see the absence of an IPT rate hike in the 2017 Budget as good progress and will continue to campaign to keep the tax at its current level, ideally without the planned increase in June, or lower,” BIBA said.

 

The trade body also called on the government to push forward the legislation necessary to bring claims management companies under the regulation of the Financial Conduct Authority. BIBA said this will help reduce the incidence of fraudulent whiplash claims, which will lead to lower premium levels.