Specialist insurer Ecclesiastical, which insures more than 45,000 charities and not-for-profit organisations in the UK, is calling on Chancellor Rishi Sunak to spare charities from the impact of Insurance Premium Tax (IPT).
Made alongside the Charity Finance Group (CFG), the IPT exemption plea comes days before the March 11 Budget, which would be Sunak’s first after taking over from Sajid Javid last month.
“Many charities are paying hundreds of pounds in IPT on top of their insurance premiums,” noted Ecclesiastical’s charity director Angus Roy.
“The government has long recognised that charities should be treated differently to commercial businesses by granting reductions and exemptions from other taxes, including VAT, business rate relief, and Gift Aid, so it seems unfair that IPT is an exception to that rule.”
Roy added: “We are urging the government to consider very carefully the negative impact that IPT is having on the work that charities do and consider granting them an exemption from this tax.”
Ecclesiastical has been working with CFG over the past three years to raise IPT awareness in the context of the third sector.
According to CFG policy manager Richard Sagar, spending on the levy has substantially increased for charities in recent years – money that could have gone towards delivering charitable objectives and helping beneficiaries.
“In keeping with the principle that money donated for public benefit should not be taxed, we would urge government to consider exempting charities from Insurance Premium Tax, or at the very least not increase it further,” said Sagar.
In a separate development, national accountancy group UHY Hacker Young has called for a reduction in IPT, with tax partner Richard Lloyd-Warne stating: “Tax is normally added to products that have little social good like cigarettes, not on sensible products like home and contents insurance.”
