IPT: Robbing Peter to pay Paul
12th October 2018
If I were to ask you which you would rather see increased; tax on tobacco or tax on insurance, my bet would be that you would say tobacco.
Insurance provides protection for millions of people whereas tobacco is a significant contributor to many health issues including heart disease and cancer.
Yet, the rate of Insurance Premium Tax has increased more rapidly than tobacco duty.
Even more surprising, Insurance Premium Tax now raises more money than beer and cider duties, wine duties and spirit duties, when alcohol-related disease also places great strain on our fantastic NHS.
In a period of just under two years years, Government doubled the tax on insurance from 6% to 12%, pushing up the cost of protection. It is of no surprise that we saw the first increase in uninsured driving claims in a decade shortly after these hikes. Health insurer Bupa has also seen a decrease in the number of people buying Private Medical Insurance, precisely at a time where demand on the NHS is increasing and placing more strain on the service.
Businesses also face an increase in their tax bill and these inevitably find their way through to consumers through higher prices as the costs in businesses increases. One broker told us they’d recently placed a haulage risk where the Insurance Premium Tax bill alone was £46,000!
We’re worried that the Government is planning a ‘raid on the responsible’ once again when the Chancellor makes his Budget speech on 29 October.
We at BIBA feel that any increases should be opposed.
Our members’ customers should not be seen as a convenient cash-cow with Government hoping to evade the culpability for increasing premiums – placing the blame at the door of insurers. For this reason, many insurers and brokers now separate out the IPT cost in policy documents, to help clients understand how much of their premium is actually going to Treasury’s coffers.
We recommend that you have as many conversations with your customers as possible, to let them understand that any increase is a tax on plumbers. It’s a tax on the high-street. It’s a tax on drivers. It’s a tax on homeowners. It’s a tax on anyone who takes steps to protect themselves and their assets though buying insurance. And, when the Government expects plaudits for freezing fuel duty, but are considering increasing Insurance Premium Tax to fill the hole, they are actually robbing Peter to pay Paul.
Ask your customers to contact to their MP, calling for them to write to Government to oppose any increase.
With your help, we can let the Government know that enough is enough. #IPTsunfair
Ask your customers to write to their MP