Chancellor Philip Hammond will deliver his first full budget speech to the House of Commons today, and the industry is holding its breath over a possible rise in Insurance Premium Tax (IPT) that could be included in the budget.
“I think everyone is hoping that tomorrow’s budget will be a quiet one for insurers but the industry has learnt not to be complacent and will be braced for unwelcome surprises,” Phil Smart, head of insurance and investment management at KPMG UK, said on Tuesday.
Smart said KPMG clients are worried that further levies would be “particularly unhelpful from a competition, cost and compliance perspective” amid the challenges posed by geopolitical uncertainties including Brexit.
“In a post-Brexit world, the role insurance plays in infrastructure development and in providing protection for economic growth will be essential, there needs to be point at which the Government stops squeezing,” Smart said.
Like their insurers, motorists across the UK are also concerned that they could face higher insurance costs following the Spring Budget, according to a survey of 1,608 drivers conducted by motoring organisation and insurance provider RAC.
According to the survey, four in 10 motorists believe that a further IPT hike will be in the Chancellor’s speech while just 34% think that the current premium level will remain unchanged.
“Sadly, Insurance Premium Tax now seems to be the big focus for the Government which is clearly why motorists are saying they are so worried about it,” said Mark Godfrey, RAC insurance director.
“Increasing IPT is proving disproportionately punitive on young drivers who are the ones that can least afford it,” he went on to say.
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