Budget results in insurance premium tax increase of over 50%

The recent budget delivered many changes with winners and losers all round; insurance being one of the losers.

The government has announced that Insurance premium tax (IPT) will increase by over 50% (6% to 9.5%) from 1st November 2015 and is forecast to generate around £1.75 billion a year for the Treasury. Travel insurance is already taxed at a higher 20% rate. This increase will impact everyone from households to businesses that purchase insurance which is not exempt from IPT.

The official detail from the government website states “The measure will increase the rate of IPT paid on premiums which are taxed at the standard rate of IPT by 3.5 %. The new standard rate will be due on premiums treated by the legislation as received on or after 1 November.”
https://www.gov.uk/government/publications/insurance-premium-tax-increase-to-standard-rate

The government argue that the UK rate is much lower than that of other countries – Germany for example is set at 19%. Whereas British Insurance Brokers Association slammed the move as a “stealth tax” on insurance policies that would hit millions of ordinary households.
http://www.biba.org.uk/MediaCenterContentDetails.aspx?ContentID=3903

We’ll leave you to draw to your own conclusions.

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