Amid calls to exempt charities from the Insurance Premium Tax (IPT), Financial Secretary to the Treasury Jane Ellison has reiterated it would be “challenging” to implement an exemption for insurance purchased “by any specific group.”
“Any such legislation would be very difficult for insurers to implement since this would require them to differentiate between customers who were buying the same type of insurance products,” said Ellison in response to a written parliamentary question from Labour MP Dan Jarvis.
The IPT is an indirect tax on insurers and covers general insurance premiums. The standard rate will rise to 12% in June from the current 10%. Ellison said there is no obligation to pass the increase to customers, as IPT is a tax on insurers.
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The rate hike will impact charities of all sizes, according to a briefing paper by the Charity Finance Group (CFG).
“For example, the average IPT bill for a charity with an income of under £500k has increased from £80 a year to £190 a year,” it wrote.
Insurance can be a significant part of charities’ costs, particularly if they are relying on donations from their community, CFG said.
“Like any business or individuals, charities have assets that they need to protect. This can be buildings, staff or volunteers,” it explained.
“In some cases, they are assets of national importance, such as listed buildings or areas of natural beauty. In other cases, they are vital pieces of equipment or volunteers that are delivering services to vulnerable people.”
According to Ellison, Treasury Ministers and officials have met with a wide range of companies and organisations, including charities and their representative bodies, to discuss relevant issues.
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