Between October 2015 and June 2017, 50 million policy holders* including charities and young drivers will see a doubling in Insurance Premium Tax (IPT) through three successive increases to a record high of 12%.
Government reasoned that this level of taxation remains below the rate in other European countries.
However, the UK is in the highest quartile of EU IPT rates and has one of the highest direct cost of regulation for insurance brokers in the world** with some BIBA members paying more than £1M per year in fees. In some
EU countries that have a higher rate of IPT, regulation is funded through general taxation and is
not comparable to the UK model.
IPT is a tax on prudence and is paid for by customers seeking protection through insurance and
is not recoverable by business. We believe any further increase in IPT is contrary to the stated policy of HM Revenue & Customs “that IPT should make the required contribution to UK Government revenue while minimising the effect on the take up of insurance”***
** London Economics
*** [HMRC, IPT01300 – Policy objectives]