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Responsible people deserve a break – ABI calls for a cut in the ‘mother of all stealth taxes’

Families and firms could be £100 a year better off if the Government does the right thing and cuts the rate of Insurance Premium Tax

The Association of British Insurers (ABI) is urging the Government in its forthcoming Budget due on 6 November to cut the rate of Insurance Premium Tax (IPT) to ease the squeeze on families and businesses who do the right thing by taking out insurance.

The standard rate of IPT has doubled since 2015, most recently going up from 10% to 12% in June 2017. It applies to the vast majority of policies sold, including property, motor, health (including cash plans), pet and business insurance.

In 2017, research by the Social Market Foundation estimated that, if the standard rate of IPT had remained at 5%, its rate prior to 2011, then the savings per UK household could be significant. For the fiscal year, 2017/18, they estimated that households were directly paying about £50 per year more as a result of higher IPT1.  If the business costs associated with higher IPT are ultimately borne by households (either through higher prices or lower incomes/dividends), then the additional cost per household could be as high as £105.

Here are the impacts of the repeated rises since 2015 on some commonly held insurance products:

Total IPT revenue for government in the last five years has risen by 109%. In 2018/9 alone, IPT raised £6.19 billion2., more than the taxes on wine, spirits or betting and gambling.

Huw Evans, Director General of the ABI, said:  

Huw Evans“IPT has doubled to 12% since 2015, and responsible people deserve a break. This tax hits people on lowest incomes the hardest, as it applies to products most people need, or are required to have, such as home and motor insurance. Our rate of IPT is the 7th highest in Europe and hits our international competitiveness at a time when the UK needs to be making itself more globally attractive.”


Notes for Editors

Enquiries to:

Malcolm Tarling                        020 7216 7410    Mobile: 07776 147667

Laura Dawson                          020 7216 7350    Mobile: 07725 245838  

1) [1] Statistics from Social Market Foundation report, “The impact of Insurance Premium Tax on UK households”, October 2017.

2) [2] HMRC data 

3) The Association of British Insurers is the voice of the UK’s world leading insurance and long-term savings industry. 

A productive, inclusive and thriving sector, we are an industry that provides peace of mind to households and businesses across the UK and powers the growth of local and regional economies by enabling trade, risk taking, investment and innovation.

4) An ISDN line is available for broadcast

5) More news and information from the ABI is available on our web site, abi.org.uk.





Last updated 23/10/2019