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Further Insurance Premium Tax increase would be double blow for businesses across UK says ABI

Another increase in Insurance Premium Tax (IPT) will be a double blow for business at a time when the UK economy faces a so called ‘cocktail of threats’ the ABI warned today.

The warning follows new figures published today that show that last November’s IPT increase could cost business nearly £500m in higher commercial insurance premiums.

Further increases to IPT could:

  • Cost business nearly £150m per 1% increase
  • Lower spending power of its customers – many families face insurance bills around £100 higher as a result of the last increase

ABI’s Director of General Insurance Policy, James Dalton, said:

James Dalton"Insurance Premium Tax is a tax on businesses that will hit companies that do the right thing. It could drive up costs of commercial insurance at a time when economic risks are growing. Unlike VAT, no element of IPT can be reclaimed by businesses meaning they will have to absorb these extra costs – this could cost jobs, drive up prices or companies may decide to reduce cover, putting them at risk if something goes wrong.

"On top of all this a rise in IPT hits demand by reducing consumer spending power. The IPT increase last November could cost business in the UK about £500m. Another rise on top of this would be a double blow for business."

The warning follows the decision to increase insurance premium tax by more than 50% - from 6% to 9.5% - at the summer 2015 budget, raising £8bn over five years - the biggest revenue raiser in the budget.

Commercial insurance includes:
  • General liability insurance
  • Property insurance
  • Commercial auto insurance
  • Business interruption insurance
  • Company health insurance

Last updated 01/07/2016