Yesterday, industry leaders including the Association of British Insurers (ABI), Lloyd's of London, the AA and Charity Finance Group urged the Chancellor to reconsider the looming increase in Insurance Premium Tax (IPT) later this year through an open letter.
However, the Spring Budget made no mention of scrapping the planned increase to 12% from June, one of a number of increases the Conservative government has introduced since first raising it to 6% in 2011 and more rapidly over the past two years.
The open letter, which also called for an exemption for charities, hit out at the dramatic rise in IPT in what has been labelled a 'raid on the responsible', pointing to the fact IPT does not benefit from the same relief that applies to VAT and that the UK now has one of the highest IPT rates in Europe. The government hasn't moved on its original announcement made late last year effectively closing the door on any chance of a u-turn in policy, although industry leaders are unlikely to give up the ghost just yet.
The letter points out that: Insurance is a basic financial safety net for tens of millions of people and businesses across the UK. The Government’s decision to double the standard rate of insurance premium tax (IPT) from 6% to 12% in less than two years has driven up the cost of over 50 million insurance policies. IPT is a stealth tax that hits households, charities and businesses who do the right thing and these increases have cost some families hundreds of pounds a year already.