“Enough is enough.”
In the view of Mike Cherry, national chair of the Federation of Small Businesses (FSB), further hikes to the Insurance Premium Tax (IPT) should be ruled out if the government wants to encourage responsible behaviour among small firms. The FSB official called the levy, which has risen from 6% to 12% in three years, “ludicrous.”
The comments come ahead of the Autumn Budget, in response to the relaunch of the #IPTsUnfair campaign by the Association of British Insurers.
“The Insurance Premium Tax deters small firms from making the right choices,” said Cherry. “It’s hard for us to persuade small businesses to take on the different kinds of protection they need when they’re constantly being hit with increases to this stealth tax.
“Whether it’s income protection, trade credit, or cyber insurance – small businesses are thinking twice about purchasing the right cover because of the ridiculous Insurance Premium Tax.”
Last week Allianz Insurance called on Chancellor Philip Hammond not to increase IPT, which the insurer described as “a significant financial burden” on small- and medium-sized enterprises.
Meanwhile also impacted by IPT hikes are charities and public sector organisations in the UK, according to Zurich Municipal. Its study found that 21% have comparably less cover in place because of the higher IPT while nearly 25% no longer cover or have reduced cover on some risks.
“Public sector organisations and charities have been faced with a difficult financial landscape for a number of years and now they are struggling to maintain the level of service and the required level of insurance protection as a result of repeated rises in IPT since 2015,” noted Zurich Municipal managing director Andrew Jepp.
“The increasing costs from insurance taxation is forcing the public and voluntary sectors to make very tough decisions to reduce or cancel cover and increase excesses and deductibles,” he said. “This means they expose themselves to more risk which may leave them vulnerable to greater financial losses if the unfortunate happens.”
Zurich Municipal has likewise urged the government to freeze IPT.
