The rate of insurance premium tax (IPT) will rise from 10 per cent to 12 per cent from June 2017, Chancellor Philip Hammond announced in his Autumn Statement.
The rise will be the third announced since November 2015 and means insurance premium tax will have doubled from 6 per cent to 12 per cent in just over 18 months.
The tax, which is applied across all insurance premiums, will effect Corporate, Commercial and Professionals insurance premiums as well as 50 million domestic policies for private insurance including cars, homes and private medical cover.
IPT was introduced in 1994 to increase revenue from the insurance sector, which was viewed by the government at the time as being under-taxed. Life insurance, permanent health insurance and all other long-term insurances are exempt. Motor insurance (if the insurance contract is taken out through a supplier of motor cars or motor cycles or through one of their connected suppliers), Holiday Travel insurance and mechanical breakdown policies are charged at 20% IPT. This higher rate remained unchanged following the autumn statement.
Steve Bamforth, Group Chief Executive at Griffiths & Armour commented, “Whilst the Chancellor’s decision has no immediate change to insurance premium costs, our priority and commitment will always be to provide the right advice and guidance when changes to the insurance market have implications for our clients’ businesses”. He added, “we would encourage any of our clients who have immediate questions to contact us and their broker will be on hand to answer their questions. Our brokers will also continue to work closely with each of our clients as part of our usual approach to client service to ensure any IPT concerns they may have are addressed”.
If you are an existing client or are responsible for your business risk and insurance programme and have any questions regarding the Autumn statement IPT increase, please get in touch and we will be delighted to contact you to discuss your query in more detail.