Mary Francis, the director-general of the Association of British Insurers (ABI), has warned that further tax hikes and regulatory demands on UK insurers this budget will hurt the industry's success in the global marketplace.
In a pre-Budget submission to the Chancellor of the Exchequer, Francis outlined several key areas of concern.
Francis said: “To help sustain its performance in overseas markets, which currently produce £7bn a year in overseas earnings for the UK economy, the insurance industry is making strenuous efforts to maintain and improve its competitiveness.
“But the tax system has an important part to play too, and we have asked the Chancellor to be alert to the dangers of fiscal policy compromising the industry's efforts.”
The ABI's Budget wish list:
It was introduced in the last Finance Act and is harsher than that faced by any of the UK's major competitors.
It applies not only discounting for the time value of money, but also a retrospective adjustment for any movement between the insurer's best estimate when the reserve is set up and the eventual discounted claim payment
The ABI believes the Pension Tax regime should reflect changed economic conditions, as well as shifts in work and retirement patterns. It wants the stakeholder pension system to be more flexible.
In addition, the upper age limit of 75 for personal pension scheme to be raised as an interim measure pending further proposals currently being prepared by the association.
Finally, the relative scarcity of long-dated gilts has created significant problems in funding annuities. the ABI wants the shift to be increased
Stamp Duty for shares and securities at 0.5% should be abolished. There should be a reduction in Stamp Duty on commercial property.
A statutory exemption from Income Tax on the benefits paid by immediate-needs policies to echo that which already exists for prefunded ones.
Extension of the existing tax exemption for benefits by pre-funded policies to include policies taken out by people on behalf of their parents