The standard rate of Insurance Premium Tax (IPT) in the UK is now the 6th highest in Europe, behind only Germany, Greece, Italy, the Netherlands and Finland, analysis
from the Association of British Insurers (ABI) shows.
In Wednesday’s Autumn Statement, the Chancellor claimed that, ‘Insurance premium tax in this country is lower than in many other European countries’.
However, based on latest European insurance industry data*, the UK had the 8th highest IPT standard rate in the EU prior to the Autumn Statement announcement, putting it in the top third.
The recently announced increase from 10% to 12% has put the UK in 6th, above Austria and Malta for the first time. The UK also has a higher rate of 20% for Travel, Hire Car and Extended Warranty insurance.
Further analysis of the Autumn Statement** shows that IPT is now due to raise more than Wine, Sprits, Beer and Air Passenger Duty, with the total raised from IPT reaching £6 billion a year by 2018/19.
Director General of the ABI Huw Evans said:
“UK consumers and businesses already pay relatively high levels of IPT, and the latest increase puts us even closer to the top of the table in Europe. It cannot be right that people are being forced to pay an increasingly high price for doing the responsible thing and buying insurance. Nor can it be fair that insurance customers are bearing the brunt of recent increases while the ‘sin taxes’ like wine, spirits and gambling are unaffected.
“Having now increased IPT three times in 18 months, it is time for Government to look elsewhere to help meet the formidable fiscal challenges it faces.”
Insurance Premium Tax affects all motor, home, travel and health insurance policies whether personal or business. Unlike VAT, businesses can’t claim back IPT.
Increasing IPT from 6% to 12% raises around £13 billion over 5 years, making it one of the biggest revenue raising measures in recent fiscal events.
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Notes for Editors
The new comparison table can be viewed in full here
*Insurance Europe, ‘Indirect Taxation on insurance contracts in Europe 2016
**see Table C5: Current Receipts here
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