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Insurance Premium Tax (IPT) to rise again

Fri 25th Nov 16

Insurance Premium Tax (IPT) will increase further to 12% from June 2017.

Chancellor of the Exchequer, Philip Hammond, revealed the increase - the tax is currently set at 10% - in the Autumn Statement.

It is the third time the tax has been increased in less than two years. In July 2015 the Summer budget saw it grow to 9.5% and just months later, in March this year, it went up again to 10%.

Prior to the Statement on 23rd November the insurance community had called for a freeze on IPT.

The British Insurance Brokers' Association (Biba) had lobbied the government for a freeze. Chief executive Steve White commented: "Insurance Premium Tax is a tax on protection and there should be no further increase in this regressive tax."

The association added in a statement following Hammond's announcement: "Over the past 15 months, policyholders have already seen an increase of 66% in the Insurance Premium Tax (IPT) they pay - this further increase to 12% in this regressive tax is outrageous and is a tax on protection which will hit everyone and especially those, just about managing'.

"We believe that this increase is contrary to the stated policy of HM Revenue and Customs that IPT should make the required contribution to HM Government revenue while minimising the effect on the take up of insurance."

It continued: "This increase comes at a time when both motor and home insurance premiums are rising and our fear is that many of those who most need it will avoid taking up insurance and be unable to afford the protection they need."

Hammond said the changes outlined in the Autumn Statement were to "build an economy that works for everyone".

The Chancellor also announced a crackdown on whiplash claims in a move he said could save motorists up to £40 a year. LV welcomed the move. Martin Milliner, LV general insurance claims director, said: "LV promised to pass on all savings from the 2015 Autumn Statement compensation crackdown to customers and that promise still stands.

"We welcome Chancellor Hammond's support for the MoJ's consultation and look forward to working with government on implementing the reforms - honest motorists and businesses should not have to keep paying the price for unnecessary whiplash claims. The UK is known as the "whiplash capital of the world" so it's vital that Government implements these proposals without delay to ensure consumers can start getting a fairer deal as soon as possible."

Source: Insurance Age 23/11/16