Recent Rise in Insurance Premium Tax

In the last emergency budget, Chancellor George Osborne announced that IPT or Insurance Premium Tax would rise from 5% to 6% from January 4th this year. Higher Rate IPT has increased in line with VAT from 17.5% to 20%.

We all pay IPT whether we are a consumer or business, and be it in relation to property, motor or travel cover.

Unlike previous rate rises, there have been no transitional provisions and despite the combined lobbying efforts of insurance bodies such as ABI, IUA and LIIBA, the Treasury was not prepared to reintroduce such measures.

Whilst some industry members were expecting a higher rise, others have stated that any rise could force some into compromising on the level of cover they buy thus threatening proper protection. Whatever the opinions, it is clear that whether we like it or not we will have a part to play in reducing the deficit.
The current estimate total of IPT contribution to Government coffers is £2.3 billion in tax per year.