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Insurance Premium Tax (IPT)

The Chancellor is being urged not to further penalise responsible insurance customers in this month’s Budget as he looks to balance the Government’s books.

The Association of British Insurers (ABI) is today launching a sequel to its award-winning #IPTsUnfair campaign, which presses the Government not to increase Insurance Premium Tax any further by demonstrating the absurdity of punishing people who are doing the right thing.

The UK has the 6th highest rate of Insurance Premium Tax in Europe since the standard rate was increased three times between November 2015 and June 2017, from 6% to 12%. It applies to the vast majority of policies sold, whether for property, motor, health, pet or business insurance.

The Social Market Foundation estimates IPT will cost each household £200 on average this year when knock-on effects are taken into account. The table below shows the impact the increase from 6% to 12% has already had on a range of insurance products.

Based on average policy costs September 2018.

The Centre for Economic and Business Research (CEBR) calculated 200,000 people moved away from health insurance and onto NHS care as a result of the trio of IPT increases.

Huw Evans, Director General of the ABI, said:

“The Chancellor has a difficult task ahead of him this Budget but he should realise a raid on the responsible is the wrong way to balance the books. People buy insurance because it is a legal requirement or because they are wisely protecting their homes, businesses, families and health. Punishing these people with another tax rise would be inexcusable. Given the need to fund the NHS it would be particularly counter-productive to make health insurance even more expensive, forcing more people to rely on over-stretched NHS resources.”

The ABI’s latest #IPTsUnfair campaign features an Insurance Premium Tax inspector handing fines to people who are doing responsible things, such as securing their properties and obeying signs about putting their dogs on a lead. The stars of this year’s film are likely to look familiar to the thousands of people who will see the short film in their Facebook feed.

#IPTsUnfair 2017

James Dalton, Director of General Insurance Policy at the Association of British Insurers (ABI), said:

“Taxing insurance premiums means punishing people who do the responsible thing. No-one would think it reasonable to fine people for clearing up after their pets, securing their homes or driving carefully. It is no more acceptable to penalise people who sensibly invest in insurance cover for themselves, their families and their belongings. Repeatedly putting up Insurance Premium Tax impacts hardest on the poorest and it’s time for the Chancellor to end this raid on the responsible and commit to no further increases this Parliament.”