HM Revenue and Customs releases its IPT bulletin, showing a 15% increase so far this financial year
Insurance Premium Tax (IPT) cash receipts have seen an increase of almost 15% in the current financial year (Apr-Dec 2017/18).
HM Revenue and Customs released its latest IPT bulletin on 31 January, which shows the cumulative total for cash receipts stood at £4.1bn for 2017/18, over half a million (£519m) and 14.3% more than the same period the previous year.
What is more, the latest three-month (Oct-Dec 2017) moving average, which demonstrates monthly fluctuations, is up £89m (22%) on the same period the year before.
In the past three years, from October 2015, the rate of IPT has increased from 6% to 12%, with the latest increase coming in June 2017.
Many industry bodies, including BIBA and the ABI, expected Philip Hammond to announce in the Autumn 2017 Budget that the rate was to rise again, so they campaigned vigorously in the months leading up to it.
When there was no rise, ABI director general, Huw Evans said:
“Not raising IPT further was the right decision by Philip Hammond and reflects the much higher profile the insurance industry has successfully given to this stealth tax. But the pressures on the public purse are not going away so we need to keep up the pressure to protect customers from further increases in future budgets.”
Speaking of the increase in IPT cash receipts, a spokesperson for the ABI said:
“This is not surprising, given that IPT rose to 12% in June last year, that premiums for lines of business such as motor have been rising due to other cost pressures ( including Discount Rate, rising vehicle repair bills) as well as a broad growth in the market subject to IPT.”
Meanwhile, Graeme Trudgill, executive director at Biba, commented:
“We believe that IPT is a tax on protection and penalises those people and businesses that are being prudent. This latest report shows that HMT is now receiving record amounts of cash from hard-pressed policyholders. BIBA’s case study Mr Toney Dearsley is currently paying Treasury £500 per year in IPT alone which we think is unfair. At these levels this tax will begin to deter the purchase of insurance, potentially leaving many un protected or under-insured.”